I N N O VAT I N G
FOR THE FUTURE
A N N U A L R E P O R T 2 0 2 1
CONTENTS
01 China Yuchai’s Core Ideals
02 Financial Highlights
04 President’s Statement
08 Corporate Background
09 Our Service Presence
10 Directors and Executive Officers of the Company
11 Board of Directors
13 Executive Officer of the Company
14 Corporate Governance
The YCA07 is a high power rating,
6-cylinder off-road engine compliant
with China off-road Tier 4 emission
standard. YCA07 is jointly designed by
Yuchai and German FEV. It is a classic
power model of China’s domestic
medium-duty engines for both industrial
and agricultural markets.
CHINA YUCHAI’S CORE IDEALS
ANNUAL REPOR T 2021 01
VISION
To be the premier manufacturer of environmentally-friendly
engines and automotive systems and a leading supplier of
high value products and services
MISSION
• Utilize our product excellence and leadership to meet
customers’ automotive and power demands
• Establish China Yuchai as a high performance and highly
respected global corporation
• Lead in the pursuit of business excellence, responsible
corporate citizenship and trusted integrity
• Create an environment that is a great place to work for
our employees
玉柴国际的核心理念
愿景
成为卓越环保发动机和汽车系统制造商和提供优良产品及
一流服务的供应商
使命
•
利用卓越的产品和领导力满足客户在汽车和能源领域的
需求
创建高绩效的国际企业
成为具有良好社会责任及拥有公众诚信度的优秀企业
营造良好的员工工作环境
•
•
•
02
CHINA YUCHAI I NTER NAT ION A L LI MI T ED
FINANCIAL HIGHLIGHTS
Revenue
2021
RMB’000
2020
RMB’000
2019
RMB’000
21,265,930
20,581,170
18,016,085
Profit attributable to equity holders of the Company
272,673
548,903
604,914
Total assets
25,100,686
26,290,958
23,854,191
Equity attributable to equity holders of the Company
8,859,152
9,014,624
8,767,529
Earnings per share attributable to ordinary equity holders of
the Company (RMB per share)
2021
RMB
6.67
2020
RMB
13.43
2019
RMB
14.81
Weighted average number of shares
40,858,290
40,858,290
40,858,290
WE SOLD
456,791
UNITS OF ENGINES
The upgraded Yuchai S04 series of
is a medium-duty engine
engines
compliant with China’s National VI
emission standards for use in light- to
medium-duty buses and trucks. It was
the first engine in to be certified by the
UN R49.07 Euro VI E stage emission
standard. With this designation, Yuchai’s
engine technology has reached the world
class standard, facilitating greater access
to European and North America markets.
FINANCIAL HIGHLIGHTS
ANNUAL REPOR T 2021 03
TOTAL ASSETS
(RMB Million)
EQUITY ATTRIBUTABLE TO EQUITY
HOLDERS OF THE COMPANY
(RMB Million)
REVENUE
(RMB Million)
25,100.7
26,291.0
23,854.2
8,859.2
9,014.6
8,767.5
21,265.9
20,581.2
18,016.1
2021
2020
2019
2021
2020
2019
2021
2020
2019
PROFIT ATTRIBUTABLE TO EQUITY
HOLDERS OF THE COMPANY
(RMB Million)
EARNINGS PER SHARE
ATTRIBUTABLE TO EQUITY
HOLDERS OF THE COMPANY
(RMB)
604.9
548.9
14.81
13.43
272.7
6.67
2021
2020
2019
2021
2020
2019
04
CHINA YUCHAI I NTER NAT ION A L LI MI T ED
PRESIDENT’S STATEMENT
Dear Shareholders,
The year 2021 was a volatile period for the Chinese economy
and commercial vehicle sales. China’s GDP grew by 12.7%
in the first half-year but slowed to growth of 8.1% for 2021.
Strong truck sales in the first half of the year gave way to
a 39.5% sales decline year-over-year in the second half
of 2021.
There were a host of challenges during the year driven by
external factors. Renewed COVID-19 restrictions, chip and
component supply chain interruptions, coal shortage-driven
power outages, a new emission standard implementation and
lower construction activities all affected the economy
and especially reduced demand for trucks in
2021. Despite these issues, our annual
revenues increased by 3.3% to RMB
21.3 billion (US$ 3.4 billion), earnings
per share was RMB 6.67 (US$ 1.06)
and annual cash flow from operations
remained positive.
in
sales
the second
According to statistics from the
China Association of Automobile
(“CAAM”), China’s
Manufacturers
commercial
unit
vehicle
declined by 36.5%
half of 2021 and was down by 6.9%
for 2021. Truck sales decreased by 39.5%
in the second half-year and by 8.7% for 2021.
The Chinese truck market is the world’s largest, having
produced over 3 million vehicles in 2021 alone. Serving
the needs of approximately 1.4 billion people in China,
trucking is essential to meet the demands of the world’s
second largest economy and China’s global supply chain
commitments.
The implementation of the stricter National VI (a) emission
standards in July substantially impacted truck demand.
Bus and truck sales rose by 25.9% in the first half-year
primarily due to a pre-buy of less expensive, less strict
National V vehicles. However, a significant inventory of
National V vehicles remained in the distribution channels
after July resulting in much lower demand for National VI
trucks in the second half of 2021. For 2021, truck sales
decreased by 8.7% particularly with the heavy-duty
segment 14.2% lower.
However, our engine sales posted positive growth in virtually
every major market segment except for trucks for 2021.
Strong bus and off-road engine unit sales partly offset lower
truck sales and resulted in total unit sales rising by 6.2%
in 2021.
Our annual bus sales grew by 53.8% as our market share
grew in each size category, mainly due to the performance
and increased acceptance of our emission-reducing National
VI engines. Off-road engine unit sales were 32.7% ahead
of last year, as both agriculture and industrial engines grew
by over 25% and engine unit sales for marine & power
generation applications surged by 53.3% in 2021 mainly due
to transitory power shortages in China. Our sales of
emerging new energy vehicle (“NEV”) products
in 2021 increased as compared to a year
ago, and our range extender systems
achieved greater market penetration.
it significantly
Being among the first producers to
meet new emission standards has
been an anchor of our growth strategy.
The National VI (a) emission standards
were nationally implemented in July
2021 and
reduces
particulate matter and NOx emissions.
These stricter standards are a major step
up from prior systems to combat automotive
pollutants and mitigate global climate change.
We introduced 14 National VI engines for on-road
markets as well as 10 Tier-4 engines for off-road markets
in 2018, well before the national implementation periods for
both new standards. In addition, in 2018 our model K08
engine passed the certification of the stricter National VI (b)
standards which are scheduled for implementation in 2023.
These accomplishments showcase our
research and
development capabilities and assure OEM customers of our
technology prowess.
Our exhaust emission control systems joint venture,
Eberspaecher Yuchai Exhaust Technology Co., Ltd.
(“Eberspaecher Yuchai”), ramped up production in 2021.
These systems are critical for our engines to reduce
emissions for the National VI and Tier-4 standards.
Eberspaecher Yuchai has a promising future with expanded
production as National VI and Tier-4 are becoming the
national emission standards across China.
PRESIDENT’S STATEMENT
Our new engines compliant with the stricter emission
standards and our burgeoning NEV products are a result of
our research and development investments. The bulk of these
expenditures was to further improve the performance, quality
and profitability of our large portfolio of National VI engines
and our emerging Tier-4 compliant engines. With these
engines well positioned in their respective markets, more
resources will be focused to accelerate the development of
our NEV technologies and for research and development
with our strategic partners.
As we continue to build new advanced diesel and gas
engines for today’s markets, we also plan for the future with
NEV products for electric vehicles and hydrogen-powered
systems. New powertrain platforms have been
under development since 2019 including
next-generation hybrid powertrains, fuel
cell systems, electric bridges, e-CVT
range extenders. Our 65kW
and
and 100kW range extenders have
already generated sales, and a more
powerful 150kW and even higher
extenders are under development.
These products have the potential to
improve the performance of NEVs and
increase customer satisfaction.
Our promising NEV capabilities have led
to new strategic initiatives with new partners
to advance our NEV program development.
A new joint venture with Beijing Xing Shun Da Bus Co.,
Ltd. will develop hydrogen energy applications for fuel
cell powertrains, and our new energy powertrains will
be used by Guangxi Sunlong Automobile Manufacturing
to develop NEV vehicles. Another agreement with the
Government of Nanning Municipality will extend our
production capabilities for NEV technologies. We have
already introduced China’s first operating hydrogen
combustion engine
for commercial vehicles, model
YCK05, which is undergoing durability testing. As more
NEV products are launched in the future, more potential
strategic partners will emerge to add to our technology
development and enhance commercialization.
Our Eberspaecher Yuchai and MTU Yuchai Power joint
ventures both realized higher sales and profitable operations
during the year. MTU Yuchai Power, our joint venture with
ANNUAL REPOR T 2021 05
MTU Friedrichshafen GmbH, produces larger diesel engines
starting from 1400 kW, cementing our position in the high
horsepower product category. Eberspaecher Yuchai, a joint
venture with Eberspaecher Exhaust Technology International
GmbH, on the other hand, enables us to lower costs through
local manufacturing of key after-treatment components.
In 2021, lower net profit mainly resulted from lower product
gross profit. The unsettled truck market, a change in product
mix, and National VI engines not attaining economy-of-
scale production in the second half of the year all contributed
to reduced net profit. We believe higher engine volumes of
National VI engines are on the horizon which will enhance
manufacturing efficiency.
As of December 31, 2021, our cash and bank
balances were RMB 5.3 billion (US$ 843.3
million) even after paying a cash dividend
of US$ 1.70 per ordinary share in
July 2021. Dividends have been
paid consistently for many years to
reward our shareholders. Maintaining
financial strength continue as our top
priorities.
In summary, despite the challenges
in 2021, we continued to generate
profitable annual sales and strong cashflow
in such a difficult market. Our National VI and
Tier-4 engines are well positioned for the future
and new and advanced technologies are being introduced
to capture market share in specific markets for both on-
and off-road applications. The impact of the National V
truck inventory overhang will fade and the supply of chips
and components has become more reliable for production.
Additionally, while sales of our traditional powertrain products
remain resilient, our NEV products are beginning to enter the
marketplace with more products under development.
Weng Ming HOH
President
May 31, 2022
06
CHINA YUCHAI I NTER NAT ION A L LI MI T ED
总裁致词
尊敬的股东们：
2021
GDP
年是中国经济和商用车销售不平稳的一年。中国上半年
。上半年卡车销量
增长
12.7%
8.1%
，但全年增速放缓至
39.5%
强劲，而下半年销量则同比下降
。
2 0 2 1
受 外 部 因 素 影 响，
COVID-19
年 出 现 一 系 列 挑 战 。再 度 实 行 的
疫情管制、芯片和生产零部件件供应链中断、煤炭
短缺导致的用电紧张、新排放标准的实施及建筑项目减少均
2021
对经济造成冲击，尤其导致
尽管存在这些困难，我们的年收入仍增长
213
亿美元），每股收益为人民币
，达到人民币
美元），
年市场对卡车需求的减少。
3.3%
6.67
亿元（
1.06
元（
34
年度运营现金保持正流入。
根据中国汽车工业协会（
年中国商用车销量下降
2021
年下半年下降
39.5%
2021
最大的卡车市场，仅在
足世界第二大经济体——中国约
对全球供应链的承诺，卡车至关重要。
14
2021
“
36.5%
中汽协
”
，全年下降
8.7%
，全年下降
年卡车生产超过
6.9%
）统计数据，
年下半
。卡车销量在
。中国拥有全世界
300
万辆。对于满
亿人口的需求，以及中国
7
a
月份实施的更为严格的国六（
）排放标准，相当程度上影
响了卡车的市场需求。上半年，客车和卡车销量增长
，
主要是因为市场抢购价格和排放要求相对较低的国五车
7
月份之后，分销渠道中积压大量国五车辆库存，导致
辆。
2021
年下半年国六卡车的市场需求大幅下降。
全年，
14.2%
25.9%
2021
8.7%
卡车销量下降
，其中重型卡车销量下降
。
2021
尽管如此，除卡车板块以外，
年我们的发动机销售几乎
在每个主要细分市场均实现正增长。客车和非道路用途发
动机销量强劲，部分抵消了卡车销量疲软带来的消极影响，
实现全年总销量增长
6.2%
。
2021
53.8%
32.7%
年我们的
随着我们在各个车型板块的市场份额提高，
客车年销量增长
，主要归因于我们的国六减排发动机
的优良性能和客户接受度的提高。非道路用途发动机销量同
比增长
，
同时，受中国暂时性的电力短缺影响，船用和发电用途发动
机销量激增
。我们的新能源汽车产品销量同比增长，
增程器动力系统实现了更大的市场渗透。
，农用和工业用发动机销量增长均超过
53.3%
25%
2021
年我们的
除卡车板块以外，
发动机销售几乎在每个主要细分
市场均实现正增长。客车和非道路
用途发动机销量强劲，部分抵消了
卡车销量疲软带来的消极影响，
实现全年总销量增长
6.2%
。
a
7
年
2021
成为行业中首批满足新排放标准的生产企业是我们一直以
a
月在全国范
）排放标准于
来的战略增长支柱。国六（
围内实施，大大减少了颗粒物和氮氧化物的排放。相较之前
）排放标准在防治汽车污染
的排放标准，更为严格的国六（
物及减缓全球气候变化方面迈出了重要一步。我们于
年
款非道路四阶段发
推出了
动机，远远提前于此两项新标准的全国实施期限。此外，我们
年通过了更为严格的国六（
的
）标准认
型发动机于
证，该标准计划于
年实施。这些成绩展示了我们的研发
能力，并向原始设备制造商客户保证了我们的技术实力。
款道路用途的国六发动机和
2018
2023
2018
K08
10
14
b
”
）于
埃贝赫玉柴
我们的排气控制系统合资企业——埃贝赫玉柴排放处理系统
2021
“
有限公司（
年加大了产量。这些排放处
理系统对减少发动机排放，满足国六和非道路四阶段标准至
关重要。随着国六和非道路四阶段排放标准在中国范围内实
施，埃贝赫玉柴生产规模扩大，前景可期。
AGV are widely used for logistics support, such as sending
engine components to the lines, or collection after machining.
ANNUAL REPOR T 2021 07
总裁致词
我们的发动机产品符合减排标准，新能源汽车产品迅速发
展，是我们研发投资的成果见证。我们大部分的研发支出用
于国六和非道路四阶段发动机产品性能、质量及盈利能力的
进一步提升。凭借这些产品在各自市场的良好定位，我们将
集中更多资源加快新能源汽车产品技术的开发，以及与战略
伙伴的共同研发。
我们将继续生产适用于当今市场需求的新型先进柴油和燃
气发动机，与此同时，我们未来计划推出针对电动汽车和氢
动力系统的新能源汽车产品。自
年以来，我们一直在开
发新的动力系统平台，包括新一代混合动力系统、燃料电池
系统、电桥、
千瓦增程
千瓦甚至更高功率的增程器正在开发
器已经投放市场，
中。这些产品将提高新能源汽车的性能，提升客户满意度。
及增程器。我们的
150
千瓦和
e-CVT
2019
100
65
7
2021
31
在
12
月
月支付每股
年
日，我们的现金和银行存款为人民币
美元的现金股息后，截至
亿元（
53
1.70
2021
8.43
年
亿
美元）。多年来，我们一直坚持派发股息，以回报我们的股东。
保持财务实力仍然是我们的首要任务。
2021
尽管
年挑战重重，我们仍取得了年度销售盈利，保持了
强劲的现金流。我们的国六和非道路四阶段发动机已经为未
来做好了充分的准备，同时，我们引进先进技术，藉以占领道
路及非道路用途发动机特定领域的市场份额。国五卡车库存
过剩的影响会逐渐消失，芯片和生产零部件的供应也在逐步
稳定扩大生产。另外，尽管我们的传统动力系统产品销售仍
具韧性，但我们的新能源汽车产品已经开始推出市场，更多
产品也正在开发进行中。
我们雄厚的新能源研发实力已促成与新合作伙伴达成战略
举措，助力新能源汽车产品的开发。我们与北京市兴顺达客
运有限责任公司成立的合资企业将开发氢能在燃料电池动
力系统的应用。我们的新能源动力系统将被广西申龙用于新
能源整车开发。与南宁市政府签订的另一项协议将扩大我们
在新能源汽车技术方面的生产能力。我们推出了中国首台商
用车燃氢发动机
，目前正在进行耐久性测试。随着未
来更多新能源汽车产品的推出，更多潜在战略伙伴将加入到
我们的技术开发，提高商业化水平。
YCK05
何永明
总裁
2022
年
31
5
月
日
“
”
玉柴安特优
MTU Friedrichshafen GmbH
我们的合资企业，埃贝赫玉柴和玉柴安特优动力有限公司
（
）在这一年均实现了销售额和利润的增长。
的合
玉柴安特优是我们与德国
1,400
资企业，主营及生产
千瓦以上的大型柴油发动机，巩固
我们在大马力产品中的地位。另一方面，我们与德国埃贝赫
排气技术国际有限公司的合资企业——埃贝赫玉柴，通过在
本地生产关键后处理系统零件来降低产品成本。
2021
年净利润下降主要是由于产品毛利下降。卡车市场的波
动、产品结构发生变化、国六发动机下半年未能实现规模生
产，均导致了净利润下降。我们相信，随着国六发动机产量契
机的来临，制造效率将会提高。
The YCK05N Hydrogen Engine is the first operating
hydrogen engine for China’s commercial vehicle market.
It adopts a number of advanced special technologies
such as high-pressure multi-point inlet air injection
technology, high-efficiency low-inertia turbocharging
lean burn combustion
technology, high-efficiency
technology, etc. This successful achievement
is
another Yuchai hydrogen technology milestone in the
development of hydrogen energy as an environmentally
friendly alternative propulsion system, following the
introduction of Yuchai’s hydrogen fuel cell technology.
08
CHINA YUCHAI I NTER NAT ION A L LI MI T ED
CORPORATE BACKGROUND
China Yuchai International Limited (“China Yuchai”) is a
Bermuda holding company established on April 29, 1993
and listed on the New York Stock Exchange under symbol
“CYD”, with major operations in China. It is a subsidiary of
Singapore-based Hong Leong Asia Ltd.
extenders, electric drive axle, etc. Through its regional
sales offices and authorized customer service centers,
Yuchai distributes its engines directly to OEMs, retailers
and agents, and provides maintenance and retrofitting
services throughout China.
China Yuchai, through six wholly owned subsidiaries,
owns a controlling 76.4% equity interest in its principal
operating subsidiary, Guangxi Yuchai Machinery Company
Limited (“Yuchai”). With its headquarter and primary
manufacturing facilities in Yulin City, Guangxi Zhuang
Autonomous Region, Yuchai engages in the manufacture,
assembly and sale of a wide variety of light-, medium-
and heavy-duty engines for trucks, buses, passenger
vehicles, construction equipment, marine and agriculture
applications. Yuchai also produces engines for diesel-
powered generators. The engines produced by Yuchai
range from diesel and natural gas engines, fuel cells,
hybrid-powered systems, pure electric systems, range
Found in 1951, Yuchai has established a reputable
brand name, strong research and development team
and significant market share in China with high-quality
products and reliable after-sales support. In 2021, Yuchai
sold 456,791 engines and is recognized as a leading
manufacturer and distributor of engines in China.
China Yuchai also holds a 48.9% shareholding interest in
HL Global Enterprises Limited (“HLGE”) which is listed on
the main board of the Singapore Exchange. HLGE currently
operates the Copthorne Hotel Cameron Highlands, a hotel
in Cameron Highlands, Malaysia.
公司背景
29
“
中国玉柴国际有限公司（
4
月
CYD
年
日的百慕大控股公司，在纽约证券交易所上市，代号为
，主要业务在中国。它是新加坡丰隆亚洲有限公司的子
）是一家成立于
玉柴国际
1993
”
公司。
6
”
）
玉柴
76.4%
家全资子公司，拥有其主要运营子公司广西
的股权。玉柴的总部
玉柴国际通过
“
玉柴机器股份有限公司（
和生产基地位于中国广西壮族自治区玉林市，从事各种轻、
中、重型的卡车、客车、乘用车、建筑设备、船舶和农业用发动
机的制造、组装和销售。玉柴也生产柴油动力发电发动机。
它的产品包括柴油机、燃气机、燃料电池、混合动力系统、
纯电动系统、增程器、电驱动桥等。通过地区销售点和授权客
服中心，玉柴直接销售发动机给原始设备制造商、代理商和
经销商，并提供全国维修和改装服务。
1951
创建于
年，玉柴凭借高质量的产品和可靠的售后支持，
在中国建立了声誉良好的品牌、强大的研发团队和可观的市
台，被认为是中国
场份额。
领先的发动机制造商和销售商之一。
年，玉柴销售发动机
456,791
2021
A worker was operating CNC equipment.
48.9%
“HLGE”
玉柴国际还持有新加坡交易所主板上市的丰隆环球有限公司
目前经营着位于马来西亚金
（
马伦高原国敦大酒店。
的股权。
HLGE
）
OUR SERVICE PRESENCE
ANNUAL REPOR T 2021 09
276
Overseas Service
Agents Appointed
18
Overseas Offices
Guangxi Yuchai Machinery Company Limited
广西玉柴机器股份有限公司总部
51 regional offices
51
个玉柴办事处
4,058 authorized customer service stations
4,058
家玉柴授权服务站
10
CHINA YUCHAI I NTER NAT ION A L LI MI T ED
DIRECTORS AND EXECUTIVE OFFICERS
OF THE COMPANY
Our Bye-Laws require that our Board of Directors shall consist of eleven members so long as the special share is outstanding.
As of February 28, 2022, there were nine members elected to and serving on our Board of Directors. Pursuant to the rights
afforded to the holder of the special share, Hong Leong Asia had designated Messrs. Gan Khai Choon, Kwek Leng Peck,
Stephen Ho Kiam Kong and Hoh Weng Ming as its nominees. Messrs. Li Hanyang and Wu Qiwei are nominees of Coomber
Investments Limited. Our directors are appointed or elected, except in the case of casual vacancy, at the annual general
meeting or at any special general meeting of shareholders and hold office until the next annual general meeting of shareholders
or until their successors are appointed or their office is otherwise vacated.
Our directors and executive officers are identified below.
Name
HOH Weng Ming (1)(4)
GAN Khai Choon (1)(4)
KWEK Leng Peck (1)(2)
STEPHEN HO Kiam Kong
LI Hanyang (1)
WU Qiwei (1)
NEO Poh Kiat (1)(2)(3)
HO Raymond Chi-Keung (2)(3)
XIE Tao (1)(3)
LOO Choon Sen (1)
Position
President and Director
Director
Director
Director
Director
Director
Director
Director
Director
Chief Financial Officer
Conyers Corporate Services (Bermuda) Limited (5)
Secretary
Mr. Yan Ping retired as Director at the Annual General Meeting of the Company on July 23, 2021.
Dr. Han Yiyong resigned from his positon as Director of the Company effective April 30, 2021.
Year First Elected
or Appointed Director
or Officer
2011
1995
1994
2020
2021
2012
2005
2004
2019
2021
2015
Dr. Phung Khong Fock Thomas resigned as Chief Financial Officer of the Company with effect from June 1, 2021.
(1) Also a Director of Yuchai.
(2) Member of the Compensation Committee.
(3) Member of the Audit Committee.
(4) Also a Director of HLGE.
(5) Codan Services Limited was renamed to Conyers Corporate Services (Bermuda) Limited with effect from April 1, 2017.
BOARD OF DIRECTORS
Mr. Hoh Weng Ming was appointed President and a
Director of the Company on July 17, 2013 and November
11, 2011, respectively. He was the Chief Financial Officer
of the Company from May 2008 to November 2011.
He is also a Director of Yuchai and HLGE. Mr. Hoh has
more than 35 years of working experience with extensive
regional experience in Singapore, Malaysia, New Zealand,
Hong Kong and China. He has worked in various roles
with companies including Johnson Electric Industrial
Manufactory Limited as well as Henan Xinfei Electric Co.,
Ltd. Previously, he held the position of Financial Controller
of the Company from 2002 to 2003 and the Chief Financial
Officer of Hong Leong Asia from 2011 to 2013. Mr. Hoh has
a Bachelor of Commerce Degree majoring in Accountancy
from the University of Canterbury, Christchurch, New
Zealand and an MBA degree from Massey University, New
Zealand. He is a Chartered Accountant in New Zealand and
a Fellow Member of the Hong Kong Institute of Certified
Public Accountants.
Dato’ Gan Khai Choon is a Director of the Company,
Yuchai, Grace Star, Venture Delta and Millennium &
(Shanghai) Limited.
Copthorne Hotels Management
He is also the Non-Executive Chairman of HLGE and
Beijing Fortune Hotel Co., Ltd., as well as the Managing
Director of Hong Leong International (Hong Kong) Limited
and Executive Director of Hong Leong Hotel Development
Limited. Dato’ Gan has extensive experience in the banking,
real estate investment and development sectors and has
been involved in a number of international projects for
the Hong Leong Group of companies, which include the
management and development of the Grand Hyatt Taipei
and the Beijing Riviera. He holds a Bachelor of Arts Degree
(Honors) in Economics from the University of Malaya.
Dato’ Gan is related to Mr. Kwek Leng Peck.
Mr. Kwek Leng Peck is a Director of the Company.
He is the Executive Chairman of Hong Leong Asia and an
Executive Director of Hong Leong Investment Holdings
Pte. Ltd. and Hong Leong Corporation Holdings Pte. Ltd.
He also sits on the boards of HL Technology, Hong Leong
China, Well Summit Investments Limited, Yuchai, and Hong
Leong Finance Limited, as well as other affiliated companies.
Mr. Kwek has extensive experience in trading, manufacturing,
property investment and development, hotel operations,
corporate finance and management. Mr. Kwek is related to
Dato’ Gan Khai Choon.
ANNUAL REPOR T 2021 11
Mr. Stephen Ho Kiam Kong is a Director of the
Company, Grace Star, Venture Delta. He is also the Chief
Executive Officer and a Director of Hong Leong Asia.
He was previously the Group Chief Financial Officer for
Wilmar International Limited, an agribusiness group, for
more than eight years. Before this, he was with Philips
Electronics for 12 years and his last position was the
Senior Vice President and Chief Financial Officer of Philips
Electronics China Group, Greater China operation based
in Shanghai. Prior to his corporate roles, Mr. Ho held
regional managerial positions in business development,
risk management and trading functions with several
large international banks based in Singapore. Mr. Ho
was awarded the Best Chief Financial Officer for the Year
2018 for large-cap companies in the Singapore Corporate
Awards. During his tenure in Shanghai, Mr. Ho served as the
Chairman of the Shanghai Board of the European Chamber
of Commerce of China and received the Magnolia Silver
Award from the Shanghai Municipality Government. Mr. Ho
holds a Bachelor of Commerce and Administration Degree
from Victoria University of Wellington, New Zealand and
had completed the Advanced Management Program at the
Harvard Business School, Boston, United States.
Mr. Li Hanyang was appointed as Director of the
Company on May 12, 2021. He was also Chairman of
Yuchai’s Board and Chairman of the GY Group (a 17.20%
shareholder of the Company). Mr. Li started his career with
Yuchai as a production preparation section chief in 1993
and was gradually promoted to deputy general manager
of Yuchai in 2000. He was transferred to GY Group in
2002 and since then he has served in various managerial
position including chief engineer, director, chairman and
party secretary of GY Group and its subsidiaries. Mr. Li
holds a Bachelor’s degree in mechanical design and
manufacturing from Tsinghua University and an MBA
from the School of Management, Huazhong University of
Science and Technology.
Dr. Wu Qiwei was elected as Director of the Company
on July 23, 2021 after serving as Alternate Director of the
Company to Mr. Yan Ping since 2012. Dr. Wu is also the
President and a director of Yuchai. He previously served
as one of the Deputy General Managers of Yuchai and was
in charge of sales and marketing. He holds a Bachelor of
Engineering Degree from Hunan University, an MBA degree
from the Huazhong University of Science and Technology
and a Doctorate in Marine Engineering from Wuhan
University of Technology.
12
CHINA YUCHAI I NTER NAT ION A L LI MI T ED
BOARD OF DIRECTORS
Mr. Neo Poh Kiat is a Director of the Company and
Yuchai. Between August 1976 and January 2005, he held
various senior managerial positions with companies in the
DBS Bank group and United Overseas Bank Ltd. Mr. Neo
is currently also a director of Cambodia Post Bank Plc,
Fullerton Credit (Sichuan) Ltd., Fullerton Credit (Chongqing)
Ltd., Fullerton Credit
(Hubei) Ltd., Fullerton Credit
(Yunnan) Ltd. and CapitaLand China Trust Management
Limited (formerly known as CapitaLand Retail China Trust
Management Limited). He holds a Bachelor of Commerce
Degree (Honors) from Nanyang University, Singapore.
Our Board of Directors has determined that Mr. Neo is
independent within the meaning of the NYSE’s corporate
governance standards, on the basis that the Company has
no material relationship with him.
Mr. Ho Raymond Chi-Keung was previously a
Director of the Company from June 2004 to September
2006 and was re-appointed as an Independent Director on
April 30, 2013. Mr. Ho is a practicing arbitrator. From 2008
to 2011, he was the Secretary General of the Law Society of
Hong Kong and prior to joining the Law Society secretariat
in 2006, he had practiced law as a solicitor for 23 years with
a wide range of experience in transactional and contentious
matters. Mr. Ho holds Bachelor of Laws and Master of
Social Sciences degrees from the University of Hong Kong
as well as a Master of Laws degree from the University of
London. He is a Fellow of the U.K. Chartered Institute of
Arbitrators and a Member of Silicon Valley Arbitration and
Mediation Center. Mr. Ho is currently listed on the Panel of
Arbitrators of Hong Kong International Arbitration Centre.
He was admitted as a Solicitor in Hong Kong and England
& Wales; and was a Barrister and Solicitor in the Australian
Capital Territory and the Province of British Columbia,
Canada; and is currently a non-practicing member of
the Law Societies in these jurisdictions. Mr. Ho is also a
director of Cheer Moon Development Limited and Power
Rich Investment Limited. Our Board of Directors has
determined that Mr. Ho is independent within the meaning
of the NYSE’s corporate governance standards, on the basis
that the Company has no material relationship with him.
Mr. Xie Tao is a Director of the Company and Yuchai.
He is also an Independent Director of Zhengjiang Wanfeng
Auto Wheel Co., Ltd and Gongniu Group Co., Ltd,
a listed company in China, as well as a Non-independent
Non-executive Director of Shanghai Vico Precision Mold
& Plastics Co., Ltd. Mr. Xie has more than 30 years of
experience in corporate management and financial advisory,
including mergers and acquisitions, corporate finance and
transaction services. He has spent the major part of his
career with PricewaterhouseCoopers (PwC) for nearly
23 years as a lead partner of the Advisory practice in PwC
China and as the Senior Partner of Corporate Finance
serving on the Executive Board of the China, Singapore and
Hong Kong member firms of PwC. Between 2012 and 2014,
he was a partner at Ernst & Young, then Deloitte, as a leader
of transaction services and corporate finance business.
He was also a financial advisor for the 2008 Beijing Olympic
Games. Between 2010 and 2017, Mr. Xie held several
executive and non-executive management roles of private
and public companies in China and abroad. Mr. Xie holds
a Bachelor’s degree in Physics from Beijing University in
China and was a member of the UK Chartered Association
of Certified Accountants. Our Board of Directors has
determined that Mr. Xie is independent within the meaning
of the NYSE’s corporate governance standards, on the
basis that the Company has no material relationship
with him.
Intelligent display screen of cylinder head
processing workshop.
EXECUTIVE OFFICER OF THE COMPANY
ANNUAL REPOR T 2021 13
Mr. Loo Choon Sen was appointed Chief Financial
Officer of the Company on June 3, 2021 and a Director
of Yuchai effective November 30, 2021. Mr. Loo has over
23 years of experience as a leader in financial operations.
Since he joined Cameron International Corporation in 2001,
he had held various positions within the group including the
positions as Director of Finance for Canada and Director
of Financial Services for Asia Pacific Middle East. In 2016,
Schlumberger Limited acquired Cameron
International
Corporation and since then he was the Director of Finance
for Schlumberger Limited’s Cameron Product Lines for
Asia Pacific Middle East. His last job was with TechnipFMC
covering the Asia Pacific region for Surface International.
Mr. Loo started his career as an auditor and he was the
Financial Controller for a subsidiary of a listed Company in
KLSE based out of Papua New Guinea in his early career.
Mr. Loo holds a Bachelor of Commerce degree in Finance
and Accounting from Curtin University of Technology,
Australia and is a CPA in Australia.
The YCY24 engine compliant with China
National VI emission standards is for use
in light-duty trucks, light-duty buses and
pick-up trucks. The engine is built with
aluminum alloy casting and provides a
lighter dry weight on installation. YCY24
has a displacement volume of 2.36 liter
and a maximum power output of 150 PS
with a maximum torque of 380 N-m.
Yuchai’s Office Building in Yunlin.
14
CHINA YUCHAI I NTER NAT ION A L LI MI T ED
CORPORATE GOVERNANCE
We are an exempted company incorporated in Bermuda and
are subject to the laws of that jurisdiction. The legal framework
in Bermuda which applies to exempted companies is flexible
and allows an exempted company to comply with the
corporate governance regime of the relevant jurisdiction in
which the company operates or applicable listing standards.
Under Bermuda law, members of a board of directors owe
a fiduciary duty to the company to act in good faith in their
dealings with or on behalf of the company and to exercise their
powers and fulfill the duties of their office honestly. In addition,
the Bermuda company legislation imposes a duty on directors
and officers of an exempted company to act honestly and in
good faith with a view to the best interests of the company
and requires them to exercise the care, diligence and skill that
a reasonably prudent person would exercise in comparable
circumstances. Bermuda legislation also imposes certain
specific duties and obligations on companies and directors,
both directly and indirectly, including duties and obligations
with respect to matters such as (a) loans to directors and
related persons; and (b) limits on indemnities for directors and
officers. Bermuda law does not impose specific obligations in
respect of corporate governance, such as those prescribed
by NYSE listing standards, requiring a company to (i) appoint
independent directors to their boards; (ii) hold regular
meetings of non-management directors; (iii) establish audit,
nominating and governance or compensation committees;
(iv) have shareholders approve equity compensation plans;
(v) adopt corporate governance guidelines; or (vi) adopt a
code of business conduct and ethics.
We are also subject to the NYSE listing standards,
although, because we are a foreign private issuer, those
standards are considerably different from those applied
to U.S. companies. Under the NYSE rules, we need only
(i) establish an independent audit committee that has
specified responsibilities as described in the following
table; (ii) provide prompt certification by our chief executive
officer of any material non-compliance with any corporate
governance rules; (iii) provide periodic written affirmations
to the NYSE with respect to our corporate governance
practices; and (iv) provide a brief description of significant
differences between our corporate governance practices
and those followed by U.S. companies. The following table
compares the Company’s principal corporate governance
practices, which are in compliance with Bermuda law,
to those required of U.S. companies.
Standard for U.S. Domestic Listed Companies
China Yuchai International Limited’s Practice
Director Independence
• A majority of the board must consist of independent
directors.
Independence is defined by various criteria including the
absence of a material relationship between director and
the listed company. Directors who are employees, are
immediate family of the chief executive officer or receive
over US$120,000 per year in direct compensation from
the listed company are not independent. Directors who
are employees of or otherwise affiliated through immediate
family with the listed company’s independent auditor are
also not independent.
• Three of our nine directors, Messrs. Xie Tao, Neo Poh
Kiat and Ho Raymond Chi-Keung are independent
within the meaning of the NYSE standards.
• The non-management directors of each company must
meet at regularly scheduled executive sessions without
management.
• As a foreign private issuer, our non-management
directors are not required to meet periodically without
management directors.
CORPORATE GOVERNANCE
ANNUAL REPOR T 2021 15
Standard for U.S. Domestic Listed Companies
China Yuchai International Limited’s Practice
• Our audit committee meets the requirements of Rule
10A-3 under the Exchange Act.
Audit Committee
• Listed companies must have an audit committee that
satisfies the requirements of Rule 10A-3 under the
Exchange Act. The rule requires that the audit committee
(i) be comprised entirely of independent directors; (ii) be
directly responsible for the appointment, compensation,
retention and oversight of the independent auditor;
(iii) adopt procedures for the receipt and treatment
of complaints with respect to accounting, internal
accounting controls or auditing matters; (iv) be authorized
to engage independent counsel and other advisors it
deems necessary in performing its duties; and (v) be
given sufficient funding by the company to compensate
the independent auditors and other advisors as well as
for the payment of ordinary administrative expenses
incurred by the committee.
• The audit committee must consist of at least three
members, and each member meets the independence
requirements of both the NYSE rules and Rule 10A-3
under the Exchange Act.
• Our Audit Committee currently consists of three
members, all of whom meet the independence
requirements of both the NYSE rules and Rule 10A-3
under the Exchange Act.
• Our Audit Committee has a charter outlining the
committee’s purpose and responsibilities, which are
similar in scope to those required of U.S. companies.
• Our Audit Committee’s charter outlines the committee’s
purpose and responsibilities which are similar in scope
to those required of U.S. companies.
• The audit committee must have a written charter that
addresses the committee’s purpose and responsibilities.
At a minimum, the committee’s purpose must be to assist
the board in the oversight of the integrity of the company’s
financial statements, the company’s compliance with legal
and regulatory requirements, the independent auditor’s
qualifications and independence and the performance of
the company’s internal audit function and independent
auditors. The audit committee is also required to review
the independent auditing firm’s annual report describing
the firm’s internal quality control procedures, any material
issues raised by the most recent internal quality control
review or peer review of the firm, or by any recent
governmental inquiry or investigation, and any steps taken
to address such issues.
Cylinder head finishing line.
16
CHINA YUCHAI I NTER NAT ION A L LI MI T ED
CORPORATE GOVERNANCE
Standard for U.S. Domestic Listed Companies
China Yuchai International Limited’s Practice
Audit Committee
The audit committee is also required to assess the auditor’s
independence by reviewing all relationships between the
company and its auditor. It must establish the company’s
hiring guidelines for employees and former employees of the
independent auditor. The committee must also discuss the
company’s annual audited financial statements and quarterly
financial statements with management and the independent
auditors, the company’s earnings press releases, as well as
financial information and earnings guidance provided to
analysts and rating agencies, and policies with respect to
risk assessment and risk management. It must also meet
separately, periodically, with management, the internal
auditors and the independent auditors.
• Each listed company must disclose whether its board
of directors has identified an Audit Committee Financial
Expert, and if not the reasons why the board has not
done so.
• Each listed company must have an internal audit function.
• Our Audit Committee assesses
former employees of
the auditor’s
independence on an ongoing basis by reviewing all
relationships between the company and its auditor.
It has established the company’s hiring guidelines
for employees and
the
independent auditor. The committee also discusses
with management and the independent auditors the
Company’s annual audited financial statements and
quarterly financial statements, the Company’s earnings
press releases, as well as financial information and
earning guidance provided to analysts and rating
agencies, and policies with respect to risk assessment
and risk management. It also meets separately,
periodically, with management, the internal auditors
and the independent auditors.
• The Board of Directors has identified Mr. Xie Tao as our
Audit Committee Financial Expert.
• We are a holding company and the majority of business
is done at our main subsidiary, Yuchai. Yuchai maintains
an independent internal audit function headed by a
secondee appointed by the Company. The Head of
Internal Audit reports to the Chairman of the Audit
Committees of the Company and Yuchai who reports
to the Boards. The Board of Yuchai approves the audit
plan, reviews significant audit issues and monitors
corrective actions taken by management.
Compensation Committee
• Listed companies must have a compensation committee
composed entirely of independent board members as
defined by the NYSE listing standards.
• Our compensation committee currently has three
members, two of whom are independent within the
meaning of the NYSE standards.
• The committee must have a written charter that
addresses its purpose and responsibilities.
relevant
• These responsibilities include (i) reviewing and approving
corporate goals and objectives
to CEO
compensation; (ii) evaluating CEO performance and
compensation in light of such goals and objectives for
the CEO; (iii) based on such evaluation, reviewing and
approving CEO compensation levels; (iv) recommending
to
incentive
compensation plans and equity-based plans; and
(v) producing a report on executive compensation as
required by the SEC to be included in the company’s
annual proxy statement or annual report. The committee
must also conduct an annual performance self-evaluation.
the board non-CEO compensation,
• Our compensation committee reviews among other
things the Company’s general compensation structure,
and reviews, recommends or approves executive
appointments, compensation and benefits of directors
and executive officers, subject to ratification by the
Board of Directors, and supervises the administration
of our employee benefit plans, if any.
CORPORATE GOVERNANCE
ANNUAL REPOR T 2021 17
Standard for U.S. Domestic Listed Companies
China Yuchai International Limited’s Practice
Nominating/Corporate Governance Committee
• Listed companies must have a nominating/corporate
governance committee composed entirely of independent
board members.
• The committee must have a written charter that
addresses its purpose and responsibilities, which include
(i) identifying qualified individuals to become board
members; (ii) selecting, or recommending that the board
select, the director nominees for the next annual meeting
of shareholders; (iii) developing and recommending
to the board a set of corporate governance principles
applicable to the company; (iv) overseeing the evaluation
of the board and management; and (v) conducting an
annual performance evaluation of the committee.
Equity-Compensation Plans
• Shareholders must be given the opportunity to vote on
all equity-compensation plans and material revisions
thereto, with limited exceptions.
Corporate Governance Guidelines
• Listed companies must adopt and disclose corporate
governance guidelines.
Code of Business Conduct and Ethics
• All listed companies, U.S. and foreign, must adopt and
disclose a code of business conduct and ethics for
directors, officers and employees, and promptly disclose
any amendment to or waivers of the code for directors or
executive officers.
• We do not have a nominating/corporate governance
committee. However, certain responsibilities of this
committee are undertaken by our Compensation
Committee, such as the review and approval of
executive appointments and all other functions are
performed by the Board of Directors.
• Our Equity Incentive Plan was approved by our
shareholders in 2014.
• We have formally adopted various corporate
governance guidelines, including Code of Business
Conduct and Ethics (described below); Audit
Committee Charter; Whistle-blowing Policy;
Insider Trading Policy; and Disclosure Controls and
Procedures.
• We adopted a Code of Business Conduct and Ethics
Policy in May 2004, which was revised on December
9, 2008. A copy of the Code is posted on our internet
website at http://www.cyilimited.com. We intend to
promptly disclose any amendment to or waivers of the
Code for directors or executive officers.
18
CHINA YUCHAI I NTER NAT ION A L LI MI T ED
FINANCIAL REPORT
CONTENTS
19 Report of Independent Registered Public Accounting Firm
22 Consolidated Statement of Profit or Loss
23 Consolidated Statement of Comprehensive Income
24 Consolidated Statement of Financial Position
26 Consolidated Statement of Changes in Equity
29 Consolidated Statement of Cash Flows
31 Notes to the Consolidated Financial Statements
ANNUAL REPORT 2021 19
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of China Yuchai International Limited
Opinion on the Financial Statements
financial position of China Yuchai
We have audited the accompanying consolidated statements of
International Limited (the “Company”) as of December 31, 2021 and 2020,
the related consolidated
statements of profit or loss, comprehensive income, changes in equity and cash flows for each of the three
years in the period ended December 31, 2021, and the related notes (collectively referred to as the
“consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results
of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in
conformity with International Financial Reporting Standards (“IFRS”) as issued by International Accounting
Standards Board.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31,
2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated April 22,
2022 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on the Company’s financial statements based on our audits. We are a public accounting
firm registered with the PCAOB and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the financial statements are free
of material misstatement, whether due to error or fraud. Our audits included performing procedures to
assess the risks of material misstatement of the financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as
the financial statements. We believe that our audits provide a
evaluating the overall presentation of
reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial
statements that was communicated or required to be communicated to the audit committee and that:
(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our
especially challenging, subjective, or complex judgments. The communication of the critical audit matter
does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are
not, by communicating the critical audit matter below, providing a separate opinion on the critical audit
matter or on the accounts or disclosures to which it relates.
20 CHINA YUCHAI INTERNATIONAL LIMITED
Capitalization of development costs
Description of the Matter
Prior to the financial year ended December 31, 2020, the Group has
commenced the process to research and develop new engine models
to comply with the new engine emission standards as promulgated by
the People’s Republic of China (the “Development Projects”). The
efforts to develop such new engines continued during the financial
year ended December 31, 2021. The Group has determined that the
Development Projects met
the capitalization criteria as stated in
Note 2.3 (l)
to the consolidated financial statements and has
capitalized RMB 992.3 million (US$ 157.0 million) of development
costs as of December 31, 2021, as disclosed in Note 12 to the
consolidated financial statements.
Auditing management’s recognition of capitalized development costs
was complex because the capitalization of development costs
requires the application of management
to determine,
amongst others, what continues to constitute development activities
and when a Development Project should cease further capitalization
of development costs. Management
is also required to
ascertain the nature of expenses that qualify for capitalization.
judgment
judgment
How We Addressed the Matter in Our
Audit
We obtained an understanding, evaluated the design and tested
controls over the authorization, approval and recording of expenses
the on-going
and controls over monitoring of
Development Projects.
the status of
audit
others,
among
included,
procedures
Our
evaluating
management’s judgment related to the determination of the research
and development phases, and the determination of which
development costs can be capitalized by conducting inquiries of the
engineers in the Research and Development (“R&D”) department to
understand the progress of the Development Projects. In addition, for
a sample of Development Projects, we evaluated the status of each
project, and the costs capitalized by comparing the supporting
documents to the Company’s capitalization criteria. We evaluated
management’s assessment that the Development Projects continued
to be in-progress by inspecting the testers’ feedback and responses
from the R&D department on a sample basis.
Ernst & Young LLP
We have served as the Company’s auditor since 2009
Singapore
April 22, 2022
ANNUAL REPORT 2021 21
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of China Yuchai International Limited
Opinion on Internal Control over Financial Reporting
We have audited China Yuchai International Limited’s internal control over financial reporting as of December 31, 2021,
based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework) (the “COSO criteria”). In our opinion, China Yuchai
International Limited (the “Company”) maintained,
in all material respects, effective internal control over financial
reporting as of December 31, 2021, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (“PCAOB”), the consolidated statements of financial position of the Company as of December 31, 2021 and
2020, the related consolidated statements of profit or loss, comprehensive income, changes in equity and cash flows for
each of the three years in the period ended December 31, 2021, and the related notes and our report dated April 22,
2022 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s
Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the
Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that
our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies
and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Ernst & Young LLP
Singapore
April 22, 2022
22 CHINA YUCHAI INTERNATIONAL LIMITED
CONSOLIDATED STATEMENT OF
PROFIT OR LOSS
Revenue
Cost of sales
Gross profit
Other operating income
Other operating expenses
Research and development expenses
Selling, general and administrative expenses
Operating profit
Finance costs
Share of (loss)/profit of associates, net of tax
Share of profit/(loss) of joint ventures, net of tax
Profit before tax
Income tax expense
Profit for the year
Attributable to:
Equity holders of the Company
Non-controlling interests
Note
6
7.1
7.2(a)
7.2(b)
7.1
7.1
7.3
5
8
31.12.2019
RMB’000
31.12.2020
RMB’000
31.12.2021 31.12.2021
US$’000
RMB’000
18,016,085
(14,910,244)
20,581,170
(17,391,599)
21,265,930
(18,313,817)
3,363,691
(2,896,747)
3,105,841
347,161
(8,675)
(492,204)
(1,806,042)
1,146,081
(131,796)
(181)
19,215
1,033,319
(172,619)
3,189,571
400,269
(21,322)
(626,478)
(1,760,036)
1,182,004
(151,170)
452
(59,422)
971,864
(192,538)
2,952,113
326,171
(9,982)
(848,812)
(1,755,957)
663,533
(115,928)
90
(95,985)
451,710
(43,816)
860,700
779,326
407,894
466,944
51,591
(1,579)
(134,259)
(277,745)
104,952
(18,337)
14
(15,182)
71,447
(6,930)
64,517
604,914
255,786
860,700
548,903
230,423
779,326
272,673
135,221
407,894
43,129
21,388
64,517
Earnings per share (dollar per share)
- Basic
- Diluted
9
9
14.81
14.81
13.43
13.43
6.67
6.67
1.06
1.06
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
ANNUAL REPORT 2021 23
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
31.12.2019 31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
RMB’000
Profit for the year
860,700
779,326
407,894
64,517
Other comprehensive income
Items that may be reclassified to profit or loss in subsequent
periods, net of tax:
Foreign currency translation
Net fair value change on debt instruments at fair value through
8,467
(63,864)
(36,685)
(5,802)
other comprehensive income
3,050
(2,752)
63,890
10,106
Net other comprehensive income that may be reclassified to profit
or loss in subsequent periods, representing other
comprehensive income for the year, net of tax
11,517
(66,616)
27,205
Total comprehensive income for the year, net of tax
872,217
712,710
435,099
Attributable to:
Equity holders of the Company
Non-controlling interests
610,369
261,848
872,217
492,966
219,744
712,710
293,240
141,859
435,099
4,304
68,821
46,383
22,438
68,821
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
24 CHINA YUCHAI INTERNATIONAL LIMITED
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
ASSETS
Non-current assets
Property, plant and equipment
Investment property
Intangible assets
Investment in associates
Investment in joint ventures
Deferred tax assets
Long-term bank deposits
Right-of-use assets
Capitalized contract cost
Current assets
Inventories
Trade and other receivables
Other current assets
Cash and cash equivalents
Short-term bank deposits
Restricted cash
Total assets
Note
31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
10
11
12
5
8
16
17
6.2
13
15
14
16
16
16
4,258,760
5,829
1,483,968
2,393
227,120
400,198
140,000
384,001
127,704
4,197,909
5,086
1,758,582
2,467
151,095
398,174
110,000
344,814
147,499
663,995
804
278,160
390
23,899
62,980
17,399
54,540
23,330
7,029,973
7,115,626
1,125,497
4,471,195
8,459,088
23,164
5,877,647
258,756
171,135
5,208,636
7,538,096
16,773
4,788,219
357,335
76,001
823,864
1,192,322
2,653
757,366
56,521
12,021
19,260,985 17,985,060
2,844,747
26,290,958 25,100,686
3,970,244
ANNUAL REPORT 2021 25
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION (Cont’d)
EQUITY AND LIABILITIES
Equity
Issued capital
Statutory reserves
Capital reserves
Retained earnings
Other components of equity
Equity attributable to equity holders of the Company
Non-controlling interests
Total equity
Non-current liabilities
Loans and borrowings
Lease liabilities
Contract liabilities
Deferred tax liabilities
Deferred grants
Other payables
Current liabilities
Trade and other payables
Loans and borrowings
Lease liabilities
Contract liabilities
Provision for taxation
Provision
Total liabilities
Total equity and liabilities
Note
31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
18
20
20
20
26
25
24
8
27
22
22
26
25
24
23
2,081,138
307,165
30,704
6,756,976
(161,359)
2,081,138
309,237
30,704
6,578,865
(140,792)
329,179
48,913
4,857
1,040,597
(22,269)
9,014,624
2,818,086
8,859,152
2,756,192
1,401,277
435,955
11,832,710 11,615,344
1,837,232
500,000
17,023
67,269
112,456
518,142
191,563
100,000
13,406
69,173
65,544
411,658
188,725
15,817
2,120
10,941
10,367
65,113
29,851
1,406,453
848,506
134,209
10,110,968
1,730,000
22,755
868,193
50,801
269,078
9,639,115
2,103,000
27,125
573,259
41,309
253,028
1,524,646
332,637
4,290
90,674
6,534
40,022
13,051,795 12,636,836
1,998,803
14,458,248 13,485,342
2,133,012
26,290,958 25,100,686
3,970,244
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
26
CHINA YUCHAI INTERNATIONAL LIMITED
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ANNUAL REPORT 2021 27
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ANNUAL REPORT 2021 29
CONSOLIDATED STATEMENT OF
CASH FLOWS
31.12.2019 31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
RMB’000
Operating activities
Profit before tax
Adjustments:
Amortization of intangible asset
Bad debt written off/(recovered)
Depreciation of:
- investment property
- property, plant and equipment
- right-of-use assets
Dividend income from quoted equity securities
Exchange (gain)/loss
Fair value loss/(gain) on foreign exchange forward contract
Fair value (gain)/loss on quoted equity securities
Finance costs
(Gain)/loss on disposal of:
- property, plant and equipment
- quoted equity securities
- right-of-use assets
Government grants
Interest income
Impairment losses on:
- development property
- property, plant and equipment
Impairment losses /(reversal of impairment losses) on trade
1,033,319
971,864
451,710
71,447
1,012
–
1,012
40
38,957
(5)
380
422,859
40,958
(959)
(4,679)
5,529
(1,118)
131,796
645
(11,528)
(9,237)
(122,371)
(177,261)
376
450,092
43,127
(166)
(1,827)
(999)
1,196
151,170
4,183
(874)
(2,574)
(209,793)
(166,970)
355
492,826
41,458
(168)
3,271
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(138)
115,928
(1,224)
(5,416)
(14,714)
(152,932)
(132,083)
6,162
(1)
56
77,952
6,558
(26)
518
–
(22)
18,337
(194)
(857)
(2,327)
(24,190)
(20,892)
3,039
3,950
–
3,920
–
7,227
–
1,143
receivables
32,340
(13,849)
(7,987)
(1,263)
Impairment losses /(reversal of impairment losses) on non-trade
receivables
Impairment losses/(reversal of write-down) of inventories, net
Inventories written off
Property, plant and equipment written off
Provision for onerous contract, net
Share of (profit)/loss of associates and joint ventures, net of tax
Write-back of trade and other payables
–
17,022
–
4,137
2,316
(19,034)
(2,087)
638
27,978
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7,417
11,323
58,970
(1,052)
(538)
(9,010)
10,085
1,134
(8,810 )
95,895
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(85)
(1,425)
1,595
179
(1,394)
15,168
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Profit before tax after adjustments
1,351,028
1,335,202
925,821
146,439
Changes in working capital
Increase in inventories
(Increase)/decrease in trade and other receivables and
(314,904)
(1,687,639)
(740,835)
(117,179)
capitalized contract cost
(514,163)
(238,571)
1,105,093
174,796
Increase/(decrease) in trade and other payables and contract
liabilities
Increase in development properties
Cash flows from operating activities
Income taxes paid
1,294,214
(71)
2,241,327
(75)
1,816,104
(233,088)
1,650,244
(234,876)
(614,601)
(202)
675,276
(170,720)
(97,213)
(31)
106,812
(27,003)
Net cash flows from operating activities
1,583,016
1,415,368
504,556
79,809
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
30 CHINA YUCHAI INTERNATIONAL LIMITED
CONSOLIDATED STATEMENT OF
CASH FLOWS (Cont’d)
31.12.2019 31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
RMB’000
Investing activities
Payment for trademarks usage fee
Additional investment in subsidiaries
Additional investment in a joint ventures
Development costs
Dividend received from:
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- quoted equity securities
Interest received
Proceeds from disposal of:
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- quoted equity securities
- right-of-use assets
Proceeds from government grants
Purchase of property, plant and equipment
Tax and relevant expenses in relation to disposal of
subsidiary (i)
Withdrawal/(placement) of fixed deposits with banks, net
(169,811)
(114)
(41,160)
(345,128)
821
959
173,745
1,178
16,429
11,008
191,491
(749,087)
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–
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(500,147)
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166
171,556
2,385
1,354
5,772
123,178
(584,676)
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(17,640)
(287,480)
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135
125,004
405
6,485
34,123
51,862
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(2,790)
(45,472)
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21
19,772
64
1,026
5,397
8,203
(90,482)
(38,887)
138,079
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(5,341)
–
(79,695)
–
(12,606)
Net cash flows used in investing activities
(810,477)
(785,753)
(738,848)
(116,867)
Financing activities
Dividends paid to:
- equity holders of the company
- non-controlling interests
Interest paid and discounting on bills receivable
Payment of principal portion of lease liabilities
Proceeds from borrowings
Repayment of borrowings
(238,758)
(203,167)
(139,118)
(48,365)
2,040,752
(2,000,773)
(245,871)
(205,525)
(148,793)
(35,363)
2,230,000
(2,056,280)
(448,712)
(223,917)
(115,813)
(23,121)
1,938,920
(1,965,920)
(70,974)
(35,418)
(18,318)
(3,657)
306,684
(310,955)
Net cash flows used in financing activities
(589,429)
(461,832)
(838,563)
(132,638)
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at January 1
Effect of exchange rate changes on balances in foreign
currencies
183,110
5,559,890
167,783
5,753,268
(1,072,855)
5,877,647
(169,696)
929,684
10,268
(43,404)
(16,573)
(2,622)
Cash and cash equivalents at December 31
5,753,268
5,877,647
4,788,219
757,366
Note:
(i)
This relates to retention money deposited in a joint signatory account with the buyer of LKNII for payment of tax
payable for the disposal of LKNII in 2018, which had been settled in 2019.
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
ANNUAL REPORT 2021 31
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
1. CORPORATE INFORMATION
1.1 Incorporation
The consolidated financial statements of China Yuchai International Limited (the “Company”) and its subsidiaries
(collectively, the “Group”) for the year ended December 31, 2021 were authorized for issue in accordance with a
resolution of the directors on April 22, 2022.
China Yuchai International Limited is a limited company incorporated under the laws of Bermuda on April 29, 1993
whose shares are publicly traded. The registered office of the Company is located at 2 Clarendon House, Church
Street, Hamilton HM11, Bermuda. On March 7, 2008, the Company registered a branch office in Singapore,
located at 16 Raffles Quay #26-00, Hong Leong Building, Singapore 048581. The principal operating office is
located at 16 Raffles Quay #39-01A, Hong Leong Building, Singapore 048581.
1.2 Investment in Guangxi Yuchai Machinery Company Limited
The Company was established to acquire a controlling financial interest in Guangxi Yuchai Machinery Company
Limited (“Yuchai”), a Sino-foreign joint stock company which manufactures, assembles and sells diesel engines in
the People’s Republic of China (the “PRC”).
The Company owns, through six wholly-owned subsidiaries, 361,420,150 shares or 76.41% of the issued share
capital of Yuchai. Guangxi Yuchai Machinery Group Company Limited (“GY Group”), a state-owned enterprise,
owns 22.09% of the issued share capital of Yuchai.
As of December 31, 2021, Yuchai has 11 (2020: nine) direct and 33 (2020: 33) indirectly owned subsidiaries, four
(2020: four) joint ventures and one (2020: one) associate. Guangxi Yuchai Machinery Monopoly Development Co.,
Ltd. (“YMMC”) and Guangxi Yuchai Accessories Manufacturing Company Limited (“GYAMC”) are the two most
significant subsidiaries of Yuchai. YMMC has 29 (2020: 29) wholly-owned subsidiaries (collectively “YMMC Group”)
located at various provinces in the PRC. The principal business of YMMC Group are trading and distribution of
components of diesel engines and automobiles. GYAMC has two wholly-owned subsidiaries (collectively “GYAMC
Group”). The principal business of GYAMC Group are sales and manufacturing of components of diesel engines.
In December 2021, Yuchai incorporated a new wholly owned subsidiary, Guangxi Yuchai Deyou Engine Systems
Co.,Ltd to succeed the trading business previously conducted by another wholly owned subsidiary, Guangxi Yuchai
Deyou Engine Co., Ltd (“YDEC”). YDEC will take over the operations of Yuchai’s marine and power generation unit
under the new name of Guangxi Yuchai Marine and Genset Power Co., Ltd.
The detailed information of Yuchai’s significant subsidiaries and joint ventures are disclosed in Notes 4 and 5.
As used in this Consolidated Financial Statements, the term “Yuchai” refer to Guangxi Yuchai Machinery Company
Limited and its subsidiaries.
1.3 Investment in HL Global Enterprises Limited
In February 2006, the Group acquired debt and equity securities interest in HL Global Enterprises Limited (“HLGE”)
through the Group’s wholly-owned subsidiaries, Grace Star Limited (“Grace Star”) and Venture Lewis Limited
(“Venture Lewis’). HLGE is a public company listed on the Main Board of the Singapore Exchange Securities
Trading Limited (“Singapore Exchange”) and primarily engaged in investment holding, and through its group
companies, invests in rental property, hospitality and property developments in Asia.
32 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
1. CORPORATE INFORMATION (cont’d)
1.3 Investment in HL Global Enterprises Limited (cont’d)
The Group’s shareholding has changed through various transactions, the Group’s equity interest in HLGE was
49.4% as of December 31, 2011.
On January 13, 2012, Grace Star transferred 24,189,170 Series B redeemable convertible preference shares
(“RCPS”), representing 100% of remaining unconverted Series B RCPS, in the capital of HLGE (the “Trust
Preference Shares”) to the Trustee pursuant to a trust deed entered into between HLGE and the Trustee. On
January 16, 2012, the Trust Preference Shares were mandatorily converted into 24,189,170 new ordinary shares in
the capital of HLGE (the “Trust Shares”) resulting in the Group’s shareholding interest in HLGE decreased from
49.4% to 48.1%. On April 4, 2012, as a result of the conversion of all the outstanding Series A redeemable
convertible preference shares held by Venture Delta Limited and Grace Star, into new ordinary shares in the
capital of HLGE, the Group’s shareholding interest in HLGE increased from 48.1% to 48.9%. The Trust Shares are
accounted for as treasury shares by HLGE, issued by HLGE and held by the Trust, which is considered as part of
HLGE. As a result, the Group’s shareholding interest in HLGE is stated as 50.1%, based on the total outstanding
ordinary shares of HLGE, net of the ordinary shares held by the Trustee under the Trust.
As of December 31, 2013, the Group’s interest in HLGE remained at 50.1%, based on the total outstanding
ordinary shares of HLGE, net of the ordinary shares held by the Trustee under the Trust.
In 2014, the Group purchased in the open market an aggregate of 465,000 ordinary shares in the capital of HLGE.
As of December 31, 2014, the Group’s interest in HLGE increased from 50.1% to 50.2%, net of the ordinary shares
held by the Trustee under the Trust.
In 2015, HLGE undertook a share consolidation exercise to consolidate every 10 ordinary shares in the capital of
HLGE into one ordinary share. Upon completion of the share consolidation exercise, the Group held 47,107,707
ordinary shares of HLGE. As of December 31, 2015, the Group’s interest in HLGE was 50.2%, net of the ordinary
shares held by the Trustee under the Trust.
As of December 31, 2020 and 2021, the Group’s shareholding interest in HLGE remains at 50.2%, net of the
ordinary shares held by the Trustee under the Trust.
The Group considers HLGE as a subsidiary as it has power to exercise effective control and direct the activities of
HLGE that most significantly affect its economic performance and has the exposure or rights to receive benefits
from HLGE from its involvement.
ANNUAL REPORT 2021 33
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES
2.1 Basis of preparation
The consolidated financial statements of the Group have been prepared in accordance with International Financial
Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
The consolidated financial statements have been prepared on a historical cost basis except as disclosed in the
accounting policies below.
The consolidated financial statements are presented in Renminbi (“RMB”) and all values are rounded to the
nearest thousand (“RMB’000”), except when otherwise indicated.
Translation of amounts from Renminbi to the United States Dollar (“US Dollar”) is solely for the convenience of the
reader. Translation of amounts from Renminbi to US Dollar has been made at the rate of RMB 6.3222 = US$ 1.00,
the rate quoted by the People’s Bank of China at the close of business on February 28, 2022 and all values are
rounded to the nearest thousand (“US$’000”), except when otherwise indicated.
The consolidated financial statements provide comparative information in respect of the previous period.
2.2 Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as of
December 31, 2021. Control is achieved when the Group is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those returns through its power over the investee.
Specifically, the Group controls an investee if and only if the Group has:
•
•
•
Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the
investee)
Exposure, or rights, to variable returns from its involvement with the investee
The ability to use its power over the investee to affect its returns
Generally, there is a presumption that a majority of voting rights results in control. To support this presumption and
when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all
relevant facts and circumstances in assessing whether it has power over an investee, including:
•
•
•
The contractual arrangement with the other vote holders of the investee
Rights arising from other contractual arrangements
The Group’s voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group
obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities,
income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated
financial statements from the date the Group gains control until
the
subsidiary.
the date the Group ceases to control
34 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (cont’d)
2.2 Basis of consolidation (cont’d)
Profit or loss and each component of other comprehensive income (“OCI”) are attributed to the equity holders of
the company of the Group and to the non-controlling interests, even if this results in the non-controlling interests
having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to
bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities,
equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in
full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity
transaction.
If the Group loses control over a subsidiary, it derecognizes the related assets (including goodwill), liabilities,
non-controlling interest and other components of equity, while any resultant gain or loss is recognized in profit or
loss. Any investment retained is recognized at fair value.
2.3 Summary of significant accounting policies
(a) Business combinations and goodwill
Business combinations are accounted for using the acquisition method. The cost of an acquisition is
measured as the aggregate of the consideration transferred, which is measured at acquisition date fair value
and the amount of any non-controlling interests in the acquiree. For each business combination, the Group
elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate
share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred and
included in administrative expenses.
The Group determines that it has acquired a business when the acquired set of activities and assets include
an input and a substantive process that together significantly contribute to the ability to create outputs. The
acquired process is considered substantive if it is critical to the ability to continue producing outputs, and the
inputs acquired include an organized workforce with the necessary skills, knowledge, or experience to
perform that process or it significantly contributes to the ability to continue producing outputs and is
considered unique or scarce or cannot be replaced without significant cost, effort, or delay in the ability to
continue producing outputs.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate
classification and designation in accordance with the contractual
terms, economic circumstances and
pertinent conditions as of the acquisition date. This includes the separation of embedded derivatives in host
contracts by the acquiree.
Any contingent consideration to be transferred by the acquirer will be recognized at
the
acquisition date. Contingent consideration classified as equity is not re-measured and its subsequent
settlement is accounted for within equity. Contingent consideration classified as an asset or liability that is a
financial instrument and within the scope of IFRS 9 Financial Instruments, is measured at fair value with the
changes in fair value recognized in the statement of profit or loss in accordance with IFRS 9.
fair value at
ANNUAL REPORT 2021 35
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (cont’d)
2.3 Summary of significant accounting policies (cont’d)
(a) Business combinations and goodwill (cont’d)
Goodwill is initially measured at cost (being the excess of the aggregate of the consideration transferred and
the amount recognized for non-controlling interests and any previous interest held over the net identifiable
assets acquired and liabilities assumed). If the fair value of the net assets acquired is in excess of the
aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the
assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts
to be recognized at the acquisition date. If the reassessment still results in an excess of the fair value of net
assets acquired over the aggregate consideration transferred, then the gain is recognized in profit or loss.
After initial recognition, goodwill
is measured at cost less any accumulated impairment losses. For the
purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date,
allocated to each of the Group’s cash-generating units that are expected to benefit from the combination,
irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
Where goodwill has been allocated to a cash-generating unit (“CGU”) and part of the operation within that unit
is disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the
operation when determining the gain or loss on disposal. Goodwill disposed in these circumstances is
measured based on the relative values of the disposed operation and the portion of the cash-generating unit
retained.
(b)
Investments in associates and joint ventures
An associate is an entity over which the Group has significant influence. Significant influence is the power to
participate in the financial and operating policy decisions of the investee, but is not control or joint control over
those policies.
A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement
have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of
an arrangement, which exists only when decisions about the relevant activities require unanimous consent of
the parties sharing control.
The considerations made in determining significant influence or joint control are similar to those necessary to
determine control over subsidiaries. The Group’s investments in its associates and joint ventures are
accounted for using the equity method.
Under the equity method, the investment in an associate or a joint venture is initially recognized at cost. The
carrying amount of the investment is adjusted to recognize changes in the Group’s share of net assets of the
associate or joint venture since the acquisition date. Goodwill relating to the associate or joint venture is
included in the carrying amount of the investment and is not tested for impairment separately.
36 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (cont’d)
2.3 Summary of significant accounting policies (cont’d)
(b)
Investments in associates and joint ventures (cont’d)
The statement of profit or loss reflects the Group’s share of the results of operations of the associate or joint
venture. Any change in OCI of those investees is presented as part of the Group’s OCI. In addition, when
there has been a change recognized directly in the equity of the associate or joint venture, the Group
recognizes its share of any changes, when applicable, in the statement of changes in equity. Unrealized
gains and losses resulting from transactions between the Group and the associate or joint venture are
eliminated to the extent of the interest in the associate or joint venture.
The aggregate of the Group’s share of profit or loss of an associate and a joint venture is shown on the face
the statement of profit or loss outside operating profit and represents profit or loss after tax and
of
non-controlling interests in the subsidiaries of the associate or joint venture.
The financial statements of the associate or joint venture are prepared for the same reporting period as the
Group. When necessary, adjustments are made to bring the accounting policies in line with those of the
Group.
loss on its investment
After application of the equity method, the Group determines whether it is necessary to recognize an
the Group
impairment
determines whether there is objective evidence that the investment in the associate or joint venture is
impaired. If there is such evidence, the Group calculates the amount of impairment as the difference between
the recoverable amount of the associate or joint venture and its carrying value, then recognizes the loss
within “Share of profit/(loss) of associates and joint ventures, net of tax” in the statement of profit or loss.
in its associate or joint venture. At each reporting date,
Upon loss of significant influence over the associate or joint control over the joint venture, the Group
measures and recognizes any retained investment at its fair value. Any difference between the carrying
amount of the associate or joint venture upon loss of significant influence or joint control and the fair value of
the retained investment and proceeds from disposal is recognized in profit or loss.
(c) Current versus non-current classification
The Group presents assets and liabilities in the statement of financial position based on current/non-current
classification. An asset is current when it is:
•
•
•
•
Expected to be realized or intended to be sold or consumed in normal operating cycle;
Held primarily for the purpose of trading;
Expected to be realized within twelve months after the reporting period; or
Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least
twelve months after the reporting period.
All other assets are classified as non-current.
ANNUAL REPORT 2021 37
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (cont’d)
2.3 Summary of significant accounting policies (cont’d)
(c) Current versus non-current classification (cont’d)
A liability is current when:
•
•
•
•
It is expected to be settled in normal operating cycle;
It is held primarily for the purpose of trading;
It is due to be settled within twelve months after the reporting period; or
There is no unconditional right to defer the settlement of the liability for at least twelve months after the
reporting period.
The terms of the liability that could, at the option of the counterparty, result in its settlement by the issue of
equity instruments do not affect its classification.
The Group classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
(d) Fair value measurement
The Group measures financial
foreign exchange forward contract, at fair value at each balance sheet date.
instruments, such as quoted equity securities and bills receivable and a
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The fair value measurement is based on
the presumption that the transaction to sell the asset or transfer the liability takes place either:
•
•
In the principal market for the asset or liability, or
In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the Group.
The fair value of an asset or a liability is measured using the assumptions that market participants would use
when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant
that would use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data
are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use
of unobservable inputs.
38 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (cont’d)
2.3 Summary of significant accounting policies (cont’d)
(d) Fair value measurement (cont’d)
All assets and liabilities for which fair value is measured or disclosed in the financial statements are
categorized within the fair value hierarchy, described as follows, based on the lowest level
input that is
significant to the fair value measurement as a whole:
•
•
•
Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 – Valuation techniques for which the lowest level
measurement is directly or indirectly observable
input that is significant to the fair value
Level 3 – Valuation techniques for which the lowest level
measurement is unobservable
input that is significant to the fair value
For assets and liabilities that are recognized in the financial statements at fair value on a recurring basis, the
Group determines whether transfers have occurred between levels in the hierarchy by re-assessing
categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at
the end of each reporting period.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the
basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as
explained above.
Fair value related disclosures for financial instruments that are measured at fair value are summarized in the
following notes:
•
•
•
Quoted equity securities
Bills receivable
Foreign exchange forward contract
Note 33
Note 33
Note 33
(e) Foreign currency translation
The Company’s functional currency is US Dollar. The Group’s consolidated financial statements are
presented in Renminbi, which is also the functional currency of Yuchai, the largest operating segment of the
Group.
Each entity in the Group determines its own functional currency, and items included in the financial
statements of each entity are measured using that functional currency.
Transactions and balances
Transactions in foreign currencies are initially recorded by the Group’s entities at their respective functional
currency spot rates at the date the transaction first qualifies for recognition.
ANNUAL REPORT 2021 39
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (cont’d)
2.3 Summary of significant accounting policies (cont’d)
(e) Foreign currency translation (cont’d)
Transactions and balances (cont’d)
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency
spot rate of exchange at the reporting date.
Differences arising on settlement or translation of monetary items are recognized in profit or loss with the
exception of monetary items that are designated as part of the hedge of the Group’s net investment of a
foreign operation. These are recognized in OCI until the net investment is disposed of, at which time, the
is reclassified to profit or loss. Tax charges and credits attributable to exchange
cumulative amount
differences on those monetary items are also recorded in OCI.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using
the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a
foreign currency are translated using the exchange rates at the date when the fair value is determined. The
gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the
recognition of gain or loss on change in fair value of the item (i.e., translation differences on items whose fair
value gain or loss is recognized in OCI or profit or loss are also recognized in OCI or profit or loss,
respectively).
In determining the spot exchange rate to use on initial recognition of the related asset, expense or income (or
part of it) on the de-recognition of a non-monetary asset or non-monetary liabilities relating to advance
consideration, the date of the transaction is the date on which the Group initially recognizes the non-monetary
asset or non-monetary liability arising from advance consideration. If there are multiple payments or receipts
in advance, the Group determines the transaction date for each payment or receipt of advance consideration.
Group companies
On consolidation, the assets and liabilities of foreign operations are translated into RMB at the rate of
exchange prevailing at the reporting date and their statements of profit or loss are translated at average
exchange rates during the reporting period. The exchange differences arising on translation for consolidation
are recognized in OCI. On disposal of a foreign operation, the component of OCI relating to that particular
foreign operation is reclassified to profit or loss.
Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying
amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign
operation and translated at the spot rate of exchange at the reporting date.
40 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (cont’d)
2.3 Summary of significant accounting policies (cont’d)
(f) Revenue from Contracts with Customers
Revenue from contracts with customers is recognized when control of the goods or services are transferred
to the customer at an amount that reflects the consideration to which the Group expects to be entitled in
exchange for those goods or services. The Group has generally concluded that it is the principal
in its
revenue arrangements because it typically controls the goods or services before transferring them to the
customer.
The disclosures of significant accounting judgements, estimates and assumptions relating to revenue from
contracts with customers are provided in Note 3.
Sale of engines
Revenue from sale of engines is recognized at the point in time when control of the engine is transferred to
the customer, generally on delivery of the engines, or, in some cases, when the engines are installed by the
customers.
The Group considers whether there are other promises in the contract that are separate performance
obligations to which a portion of the transaction price needs to be allocated (e.g. warranties). In determining
the transaction price for the sale of engines, the Group considers the effects of variable consideration and the
existence of significant financing components.
(i) Variable consideration
includes a variable amount,
the consideration in a contract
the Group estimates the amount of
If
consideration to which it will be entitled in exchange for transferring the goods to the customer. The variable
consideration is estimated at contract inception and constrained until it is highly probably that a significant
revenue reversal
in the amount of cumulative revenue recognized will not occur when the associated
uncertainty with the variable consideration is subsequently resolved. Some contracts for the sale of engines
provide customers with volume rebates. The volume rebates give rise to variable consideration.
Volume rebates
The Group provides certain customers with retrospective volume rebates when the quantity of products
purchased during the period exceeds a threshold specified in the contract. To estimate the variable
considerations for the expected future rebates, the Group applies the most likely amount method for each
individual contract. The Group then applies the requirements on constraining estimates of variable
consideration in order to determine the amount of variable consideration that can be included in the
transaction price and recognized as revenue. A refund liability is recognized in “Trade and other payables”
(Note 22) for the expected future rebates (i.e., the amount not included in the transaction price).
ANNUAL REPORT 2021 41
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (cont’d)
2.3 Summary of significant accounting policies (cont’d)
(f) Revenue from Contracts with Customers (cont’d)
Sale of engines (cont’d)
(i) Variable consideration (cont’d)
Sales Returns
The Group does not extend its sales returns policy to all customers. However the Group allows for certain
returns, only on a case-by-case basis. The Group uses the expected value method to estimate the provision
for such returns based on the historical return rates and account for it as a reduction in revenue and form part
of refund liability that is recognized in “Trade and other payables” (Note 22). A corresponding right of return
assets is recognized in “Trade and other receivables” (Note 15).
(ii) Significant financing component
The Group receives advance payments from customers for the sale of engines. The Group applies the
practical expedient for short-term advances received from customers. That is, the promised amount of
consideration is not adjusted for the effects of a significant financing component if the period between the
transfer of the promised good or service and the payment is one year or less.
Warranty obligations
The Group typically provides warranties for general repairs of defects as part of the sale of engines. These
assurance-type warranties are accounted for as warranty provisions. Refer to the accounting policy on
warranty provisions in Section (s) Provisions.
Certain contracts provide a customer with maintenance service, i.e. a distinct service to the customer in
addition to the assurance that the product complies with agreed upon specification. These service-type
warranties are bundled together with the sale of engines. Contracts for bundled sale of engines and a
service-type warranty comprise two performance obligations because the promises to transfer the engines
and to provide the service-type warranty are capable of being distinct. Using a combination of expected cost-
plus margin and residual approaches, the transaction price is allocated to the service-type warranty and
engines with the former performance obligation recognizing a corresponding contract liability. Revenue for
service-type warranties is recognized at the point in time when the service-type warranty is provided.
42 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (cont’d)
2.3 Summary of significant accounting policies (cont’d)
(f) Revenue from Contracts with Customers (cont’d)
Sale of completed development properties
Revenue is recognized when control of the property has been transferred to the customer, either over time or
at a point in time, depending on the contractual terms and the practices in the legal jurisdictions.
For development properties whereby the Group is restricted contractually from directing the properties for
another use as they are being developed and has an enforceable right
for performance
completed to date, revenue is recognized over time, based on the construction and other costs incurred
to-date as a proportion of the estimated total construction and other costs to be incurred.
to payment
For development properties whereby the Group does not have an enforceable right
performance completed to date, revenue is recognized when the customer obtains control of the asset.
to payment
for
Rendering of services
Revenue from rendering services relates to project management contracts, and hotel room and restaurant
operations. Revenue is recognized over the period in which the services are rendered, by reference to
completion of the specific transaction assessed on the basis of the actual service provided as a proportion of
the total services to be performed.
Contract balances
Trade receivables
A receivable is recognized if an amount of consideration that is unconditional is due from the customer (i.e.
only the passage of time is required before payment of the consideration is due). Refer to accounting policies
of financial assets in Section (m) Financial instruments – Initial recognition and subsequent measurement.
Contract liabilities
A contract liability is recognized if a payment is received or a payment is due (whichever is earlier) from a
customer before the Group transfers the related goods or services. Contract liabilities are recognized as
revenue when the Group performs under the contract (i.e., transfers control of the related goods or services
to the customer).
ANNUAL REPORT 2021 43
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (cont’d)
2.3 Summary of significant accounting policies (cont’d)
(f) Revenue from Contracts with Customers (cont’d)
Right of return assets
A right-of-return asset is recognised for the right to recover the goods expected to be returned by customers.
The asset is measured at the former carrying amount of the inventory, less any expected costs to recover the
goods and any potential decreases in value. The Group updates the measurement of the asset for any
revisions to the expected level of returns and any additional decreases in the value of the returned products.
Refund liabilities
A refund liability is recognized for the obligation to refund some or all of the consideration received (or
receivable) from a customer. The Group’s refund liabilities arise from customers’ right of return and volume
rebates. The liability is measured at the amount the Group ultimately expects it will have to return to the
customer. The Group updates its estimates of refund liabilities (and the corresponding change in the
transaction price) at the end of each reporting period.
Costs to fulfil a contract
Costs to fulfil a contract are capitalized if the costs relate directly to the contract, generate or enhance
resources used in satisfying the contract and are expected to be recovered. Other contract costs are
expensed as incurred.
Capitalized contract costs are subsequently recognized in profit or loss as the Group recognizes the related
revenue. An impairment loss is recognized in profit or loss to the extent that the carrying amount of the
capitalized contract costs exceeds the remaining amount of consideration that the Group expects to receive
in exchange for the goods or services to which the contract costs relates less the costs that relate directly to
providing the goods and that have not been recognized as expenses.
(g) Government grants
Government grants are recognized where there is reasonable assurance that the grant will be received and
all attached conditions will be complied with. When the grant relates to an expense item, it is recognized as
income on a systematic basis over the periods that the related costs, for which it is intended to compensate,
are expensed. When the grant relates to an asset, it is recognized as income in equal amounts over the
expected useful life of the related asset.
44 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (cont’d)
2.3 Summary of significant accounting policies (cont’d)
(h) Taxes
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid
to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted
or substantively enacted at the reporting date in the countries where the Group operates and generates
taxable income.
Current income tax relating to items recognized directly in equity is recognized in equity and not in the
statement of profit or loss. Management periodically evaluates positions taken in the tax returns with respect
to situations in which applicable tax regulations are subject to interpretation and establishes provisions where
appropriate.
Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets
and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognized for all taxable temporary differences, except:
•
•
When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss
In respect of taxable temporary differences associated with investments in subsidiaries, associates and
interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled
and it is probable that the temporary differences will not reverse in the foreseeable future
Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax
credits and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that
taxable profit will be available against which the deductible temporary differences and the carry forward of
unused tax credits and unused tax losses can be utilized, except:
•
•
When the deferred tax asset relating to the deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time of
the transaction, affects neither the accounting profit nor taxable profit or loss
In respect of deductible temporary differences associated with investments in subsidiaries, associates
and interests in joint ventures, deferred tax assets are recognized only to the extent that it is probable
that the temporary differences will reverse in the foreseeable future and taxable profit will be available
against which the temporary differences can be utilized
ANNUAL REPORT 2021 45
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (cont’d)
2.3 Summary of significant accounting policies (cont’d)
(h) Taxes (cont’d)
Deferred tax (cont’d)
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that
it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax
asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date and are
recognized to the extent that it has become probable that future taxable profits will allow the deferred tax
asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when
the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date.
Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred
tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity.
Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate
recognition at that date, are recognized subsequently if new information about facts and circumstances
change. The adjustment is either treated as a reduction to goodwill (as long as it does not exceed goodwill) if
it was incurred during the measurement period or recognized in profit or loss.
The Group offsets deferred tax assets and deferred tax liabilities if and only if it has a legally enforceable right
to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities
relate to income taxes levied by the same taxation authority on either the same taxable entity or different
taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realize the
assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred
tax liabilities or assets are expected to be settled or recovered.
Sales tax
Expenses and assets are recognized net of the amount of sales tax, except:
•
•
When the sales tax incurred on a purchase of assets or services is not recoverable from the taxation
authority, in which case, the sales tax is recognized as part of the cost of acquisition of the asset or as
part of the expense item, as applicable
When receivables and payables are stated with the amount of sales tax included
The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of
receivables or payables in the statement of financial position.
46 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (cont’d)
2.3 Summary of significant accounting policies (cont’d)
(i) Cash dividend and non-cash distribution to equity holders of the company
The Company recognizes a liability to make cash or non-cash distributions to equity holders of the company
when the distribution is authorized and the distribution is no longer at the discretion of the Company. A
distribution is authorized when it is approved by the shareholders. A corresponding amount is recognized
directly in equity.
Non-cash distributions are measured at
measurement recognized directly in equity.
the fair value of
the assets to be distributed with fair value
Upon distribution of non-cash asset, any difference between the carrying amount of the liabilities and the
carrying amount of the assets distributed is recognized in the statement of profit or loss.
(j) Property, plant and equipment
Construction in progress is stated at cost, net of accumulated impairment losses, if any. Property, plant and
equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any.
Such cost includes the cost of replacing part of the property, plant and equipment and borrowing costs for
long-term construction projects if the recognition criteria are met. When significant parts of property, plant and
equipment are required to be replaced at intervals, the Group depreciates them separately based on their
specific useful lives. Likewise, when a major inspection is performed, its cost is recognized in the carrying
amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair
and maintenance costs are recognized in profit or loss as incurred.
Freehold land has an unlimited useful life and therefore is not depreciated. Asset under construction included
in property, plant and equipment are not depreciated as these assets are not yet ready for intended use.
Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as follows:
Freehold buildings
Leasehold buildings and improvements
Plant, machinery and equipment
Office furniture, fittings and equipment
Motor and transport vehicles
50 years
:
: Shorter of 15 to 50 years or lease term
:
:
:
3 to 20 years
3 to 20 years
3.5 to 15 years
An item of property, plant and equipment and any significant part initially recognized is derecognized upon
disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising
on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the
carrying amount of the asset) is included in the statement of profit or loss when the asset is derecognized.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed
at each financial year end and adjusted prospectively, if appropriate.
ANNUAL REPORT 2021 47
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (cont’d)
2.3 Summary of significant accounting policies (cont’d)
(j) Property, plant and equipment (cont’d)
The Group capitalizes interest with respect to major assets under installation or construction based on the
weighted average cost of the Group’s general borrowings and actual interest incurred for specific borrowings.
Repairs and maintenance of a routine nature are expensed while those that extend the life of assets are
capitalized.
Construction in progress represents factories under construction and machinery and equipment pending
installation. All direct costs relating to the acquisition or construction of buildings and machinery and
equipment, including interest charges on borrowings, are capitalized as construction in progress.
(k)
Investment properties
Investment properties are properties owned by the Group that are held to lease to third parties and earn
rentals rather than for use in the production or supply of goods or services, or for administrative purposes, or
in the ordinary course of business. Investment properties comprise completed investment properties and
properties that are being constructed or developed for future use as investment properties.
investment properties are carried at cost
to initial
Investment properties are initially recognized at cost,
recognition,
less accumulated depreciation and impairment
losses. Depreciation is recognized in profit or loss on a straight-line basis over the estimated useful lives of
the investment properties. The estimated useful
lives and
residual values of investment properties are reassessed at each reporting date.
life is 30 years. Depreciation methods, useful
including transaction costs. Subsequent
Investment properties are derecognized either when they have been disposed of (i.e., at the date recipient
obtains control) or when they are permanently withdrawn from use and no future economic benefit is
expected from its disposal. The difference between the net disposal proceeds and the carrying amount of the
asset is recognized in profit or loss in the period of de-recognition. In determining the amount of consideration
from the de-recognition of investment property the Group considers the effects of variable consideration,
existence of a significant financing component, non-cash consideration, and consideration payable to the
buyer (if any).
Transfers are made to (or from) investment property only when there is a change in use. Under cost model,
the transfer does not change the carrying amount of the property transferred.
(l)
Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible
assets acquired in a business combination is their fair value at the date of acquisition. Following initial
less any accumulated amortization and accumulated
recognition,
impairment
Internally generated intangibles, excluding capitalized development costs, are not
capitalized and the related expenditure is reflected in profit or loss in the period in which the expenditure is
incurred.
intangible assets are carried at cost
losses.
48 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (cont’d)
2.3 Summary of significant accounting policies (cont’d)
(l)
Intangible assets (cont’d)
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment
whenever there is an indication that the intangible asset may be impaired. The amortization period and the
amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each
reporting period. Changes in the expected useful
life or the expected pattern of consumption of future
economic benefits embodied in the asset are considered to modify the amortization period or method, as
appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible
assets with finite lives is recognized in the statement of profit or loss in the expense category that is
consistent with the function of the intangible assets.
Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, either
individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to
determine whether the indefinite life continues to be supportable. If not, the change in useful
life from
indefinite to finite is made on a prospective basis.
An intangible asset is derecognized upon disposal (i.e., at the date the recipient obtains control) or when no
future economic benefits are expected from its use or disposal. Any gain or loss arising upon de-recognition
of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the
asset) is included in the statement of profit or loss.
Research and development costs
Research costs are expensed as incurred.
Development expenditures on an individual project are recognized as an intangible asset when the Group
can demonstrate:
•
•
•
•
•
The technical feasibility of completing the intangible asset so that the asset will be available for use or
sale
Its intention to complete and its ability to use or sell the asset
How the asset will generate future economic benefits
The availability of resources to complete the asset
The ability to measure reliably the expenditure during development
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any
accumulated amortization and accumulated impairment
the asset begins when
development is complete and the asset is available for use. Development costs are amortized over the period
of expected future benefit. During the period of development, the asset is tested for impairment annually.
losses. Amortization of
ANNUAL REPORT 2021 49
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (cont’d)
2.3 Summary of significant accounting policies (cont’d)
(l)
Intangible assets (cont’d)
Goodwill
Accounting policy for goodwill is separately discussed in Note 2.3(a).
A summary of the policies applied to the Group’s intangible assets is as follows:
Useful lives
Amortization method used
Internally generated or acquired
Trademarks
Technology know-how
Development costs
Indefinite
8 years
No amortization Amortized on a straight-line basis
over the period of the technology
know-how
Internally generated
Acquired
*
*
Internally generated
*
Development costs relate to on-going development projects that have not been completed and are not
available for use.
(m) Financial instruments – Initial recognition and subsequent measurement
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity.
Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortized cost, fair value
through other comprehensive income (“OCI”), and fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial asset’s contractual cash
trade
flow characteristics and the Group’s business model
receivables that do not contain a significant financing component or which the Group has applied the practical
expedient, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset
not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant
financing component or which the Group has applied the practical expedient are measured at the transaction
price as disclosed in Section (f) Revenue from Contracts with Customers.
for managing them. With the exception of
In order for a financial asset to be classified and measured at amortized cost or fair value through OCI, it
needs to give rise to cash flows that are “solely payments of principal and interest (“SPPI”)” on the principal
amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.
Financial assets with cash flows that are not SPPI are classified and measured at fair value through profit or
loss, irrespective of the business model.
50 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (cont’d)
2.3 Summary of significant accounting policies (cont’d)
(m) Financial instruments – Initial recognition and subsequent measurement (cont’d)
Financial assets (cont’d)
Initial recognition and measurement (cont’d)
The Group’s business model for managing financial assets refers to how it manages its financial assets in
order to generate cash flows. The business model determines whether cash flows will result from collecting
contractual cash flows, selling the financial assets, or both. Financial assets classified and measured at
amortized cost are held within a business model with the objective to hold financial assets in order to collect
contractual cash flows while financial assets classified and measured at fair value through OCI are held within
a business model with the objective of both holding to collect contractual cash flows and selling.
Purchases or sales of financial assets that require delivery of assets within a time frame established by
regulation or convention in the market place (regular way trades) are recognized on the trade date, i.e., the
date that the Group commits to purchase or sell the asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
•
•
•
•
Financial assets at amortized cost (debt instruments)
Financial assets at
instruments)
fair value through OCI with recycling of cumulative gains and losses (debt
Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses
upon de-recognition (equity instruments)
Financial assets at fair value through profit or loss
Financial assets at amortized cost (debt instruments)
Financial assets at amortized cost are subsequently measured using the effective interest (“EIR”) method and
are subject to impairment. Gains and losses are recognized in profit or loss when the asset is derecognized,
modified or impaired.
The Group’s financial assets at amortized cost
receivables that are held to maturity.
includes trade and other receivables, and certain bills
ANNUAL REPORT 2021 51
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (cont’d)
2.3 Summary of significant accounting policies (cont’d)
(m) Financial instruments – Initial recognition and subsequent measurement (cont’d)
Financial assets (cont’d)
Subsequent measurement (cont’d)
Financial assets at fair value through OCI (debt instruments)
For debt instruments at fair value through OCI, interest income, foreign exchange revaluation and impairment
losses or reversals are recognized in the statement of profit or loss and computed in the same manner as for
financial assets measured at amortized cost. The remaining fair value changes are recognized in OCI. Upon
de-recognition, the cumulative fair value change recognized in OCI is recycled to profit or loss.
The Group’s debt instruments at fair value through OCI includes certain bills receivable that are not held to
maturity.
Financial assets designated at fair value through OCI (equity instruments)
the Group can elect
Upon initial recognition,
to classify irrevocably its equity investments as equity
instruments designated at fair value through OCI when they meet the definition of equity under IAS 32
Financial Instruments: Presentation and are not held for trading. The classification is determined on an
instrument-by-instrument basis.
Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognized as
other income in the statement of profit or loss when the right of payment has been established, except when
the Group benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case,
such gains are recorded in OCI. Equity instruments designated at fair value through OCI are not subject to
impairment assessment.
The Group does not have equity instruments measured under this category.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are carried in the statement of financial position at fair
value with net changes in fair value recognized in statement of profit or loss.
This category includes derivative instruments and listed equity investments which the Group had not
irrevocably elected to classify at fair value through OCI. Dividends on listed equity investments are also
recognized as other income in the statement of profit or loss when the right of payment has been established.
52 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (cont’d)
2.3 Summary of significant accounting policies (cont’d)
(m) Financial instruments – Initial recognition and subsequent measurement (cont’d)
Financial assets (cont’d)
Subsequent measurement (cont’d)
Financial assets at fair value through profit or loss (cont’d)
A derivative embedded in a hybrid contract, with a financial liability or non-financial host, is separated from
the host and accounted for as a separate derivative if: the economic characteristics and risks are not closely
related to the host; a separate instrument with the same terms as the embedded derivative would meet the
definition of a derivative; and the hybrid contract is not measured at fair value through profit or loss.
Embedded derivatives are measured at fair value with changes in fair value recognized in profit or loss.
Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies
the cash flows that would otherwise be required or a reclassification of a financial asset out of the fair value
through profit or loss category.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets)
is primarily derecognized (i.e., removed from the Group’s consolidated statement of financial position) when:
•
•
The rights to receive cash flows from the asset has expired; or
The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation
to pay the received cash flows in full without material delay to a third party under a “pass-through”
arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the
asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the
asset, but has transferred control of the asset
When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-
through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership.
When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor
transferred control of the asset, the Group continues to recognize the transferred asset to the extent of its
continuing involvement. In that case, the Group also recognizes an associated liability. The transferred asset
and the associated liability are measured on a basis that reflects the rights and obligations that the Group has
retained.
Continuing involvement that takes the form a guarantee over the transferred asset is measured at the lower
of the original carrying amount of the asset and the maximum amount of consideration that the Group could
be required to repay.
ANNUAL REPORT 2021 53
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (cont’d)
2.3 Summary of significant accounting policies (cont’d)
(m) Financial instruments – Initial recognition and subsequent measurement (cont’d)
Financial assets (cont’d)
Impairment
Further disclosures relating to impairment of financial assets are also provided in the following notes:
•
•
Debt instruments at fair value through OCI represented by bills receivable (Note 15)
Trade receivables (Note 15)
The Group recognizes an allowance for expected credit losses (“ECLs”) for all debt instruments not held at
fair value through profit or loss and financial guarantee contracts. ECLs are based on the difference between
the contractual cash flows due in accordance with the contract and the cash flows that the Group expects to
receive, discounted at an approximation of the original effective interest rate. The expected cash flows will
include cash flows from the sale of collateral held or other credit enhancements that are integral to the
contractual terms.
ECLs are recognized in two stages. For credit exposure for which there has not been a significant increase in
credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are
possible within the next 12 months (a “12-month ECL”). For those credit exposures for which there has been
a significant increase in credit risk since initial recognition, a loss allowance is recognized for credit losses
expected over the remaining life of the exposure irrespective of timing of the default (a “lifetime ECL”).
For trade receivable, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does
not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each
reporting date. The Group has established a provision matrix that is based on its historical credit loss
experience adjusted for forward-looking factors specific to the debtors and the economic environment.
For debt instruments at fair value through OCI, the Group applies the low credit risk simplifications. At every
reporting date, the Group evaluate whether the debt instrument is considered to have low credit risk using all
reasonable and supportable information that
In making the
evaluation, the Group reassesses the external credit rating of the debt instrument. In addition, the Group
considers that there has been a significant increase in credit risk when contractual payments are more than
30 days past due.
is available without undue cost or effort.
The Group’s debt instruments at fair value through OCI comprise solely of bills receivable. It is the Group’s
policy to measure ECLs on such instruments on a 12-month basis. However, when there has been a
significant increase in credit risk since origination, the allowance will be based on the lifetime ECL.
54 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (cont’d)
2.3 Summary of significant accounting policies (cont’d)
(m) Financial instruments – Initial recognition and subsequent measurement (cont’d)
Financial assets (cont’d)
Impairment (cont’d)
The Group considers a financial asset in default when contractual payments are more than 360 days from the
invoice date. However, in certain cases the Group may also consider a financial asset to be in default when
internal or external
information indicates that the Group is unlikely to receive the outstanding contractual
amounts in full before taking into account any credit enhancements held by the Group. A financial asset is
written off when there is no reasonable expectation of recovering contractual cash flow.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss,
loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge,
as appropriate.
All financial
payables, net of directly attributable transaction costs.
liabilities are recognized initially at fair value and, in the case of loans and borrowings and
The Group’s financial liabilities include trade and other payables, loans and borrowings, lease liabilities, other
liabilities and derivative financial instruments.
Subsequent measurement
For purposes of subsequent measurement, financial liabilities are classified in two categories:
•
•
Financial liabilities at fair value through profit or loss
Financial liabilities at amortized cost
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial
liabilities designated upon initial recognition as at fair value through profit or loss.
Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the
near term. This category also includes derivative financial instruments entered into by the Group that are not
designated as hedging instruments in hedge relationships as defined by IFRS 9. Separated embedded
derivatives are also classified as held for trading unless they are designated as effective hedging instruments.
ANNUAL REPORT 2021 55
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (cont’d)
2.3 Summary of significant accounting policies (cont’d)
(m) Financial instruments – Initial recognition and subsequent measurement (cont’d)
Financial liabilities (cont’d)
Subsequent measurement (cont’d)
Financial liabilities at fair value through profit or loss (cont’d)
Gains or losses on liabilities held for trading are recognized in the statement of profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the
initial date of recognition, and only if the criteria in IFRS 9 are satisfied. The Group has not designated any
financial liability as at fair value through profit or loss.
Financial liabilities at amortized cost
This is the category most relevant to the Group. After initial recognition, financial liabilities that are not carried
at fair value through profit or loss are subsequently measured at amortized cost using the EIR method. Gains
and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR
amortization process.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs
that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of profit
or loss.
This category generally applies to loans and borrowings, lease liabilities, other liabilities and payables. For
more information, refer to Note 22, 25 and 26.
De-recognition
liability is derecognized when the obligation under the liability is discharged or cancelled or
A financial
liability is replaced by another from the same lender on substantially
expires. When an existing financial
different
terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as the de-recognition of the original liability and the recognition of a new liability. The
difference in the respective carrying amounts is recognized in the statement of profit or loss.
Offsetting of financial instruments
Financial assets and financial
is reported in the consolidated
liabilities are offset and the net amount
statement of financial position if there is a currently enforceable legal right to offset the recognized amounts
and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
56 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (cont’d)
2.3 Summary of significant accounting policies (cont’d)
(n)
Inventories
Inventories are valued at the lower of cost and net realizable value.
Costs incurred in bringing each product to its present location and condition are accounted for as follows:
•
•
Raw materials: purchase cost on a weighted average basis
Finished goods and work in progress: cost of direct materials and labor and a proportion of
manufacturing overheads based on the normal operating capacity, but excluding borrowing costs
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of
completion and the estimated costs necessary to make the sale.
(o)
Impairment of non-financial assets
Further disclosures relating to impairment of non-financial assets are also provided in the following notes:
•
•
•
•
•
•
Disclosures for significant assumptions (Note 3)
Investment in joint ventures (Note 5)
Property, plant and equipment (Note 10)
Investment property (Note 11)
Intangible assets (Note 12)
Right-of-use assets (Note 17)
The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If
any indication exists, or when annual impairment testing for an asset is required, the Group estimates the
asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value
less costs of disposal and its value in use. The recoverable amount is determined for an individual asset,
unless the asset does not generate cash inflows that are largely independent of those from other assets or
groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is
considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into
account. If no such transactions can be identified, an appropriate valuation model is used. These calculations
are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available
fair value indicators.
ANNUAL REPORT 2021 57
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (cont’d)
2.3 Summary of significant accounting policies (cont’d)
(o)
Impairment of non-financial assets (cont’d)
The Group bases its impairment calculation on detailed budgets and forecast calculations, which are
prepared separately for each of the Group’s CGUs to which the individual assets are allocated. These
budgets and forecast calculations generally cover a period of eight to ten years. A long-term growth rate is
calculated and applied to project future cash flows after the tenth year where appropriate. Impairment losses
are recognized in the statement of profit or loss in expense categories consistent with the function of the
impaired asset.
For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is
an indication that previously recognized impairment losses no longer exist or have decreased. If such
indication exists, the Group estimates the asset’s or CGU’s recoverable amount. A previously recognized
impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s
is limited so that the
recoverable amount since the last impairment loss was recognized. The reversal
carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that
would have been determined, net of depreciation, had no impairment loss been recognized for the asset in
prior years. Such reversal is recognized in the statement of profit or loss.
Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be
impaired.
Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs)
to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an
impairment loss is recognized. Impairment losses relating to goodwill cannot be reversed in future periods.
Intangible assets with indefinite useful
appropriate, and when circumstances indicate that the carrying value may be impaired.
lives are tested for impairment annually at
the CGU level, as
(p) Cash and cash equivalents
For the purpose of the consolidated statement of cash flows, cash and cash equivalents in the statement of
financial position comprise cash at banks and on hand, short-term highly liquid deposits with a maturity of
three months or less, that are readily convertible to a known amount of cash and subject to an insignificant
risk of changes in value.
(q) Leases
The Group assess at contract inception whether a contract is, or contains, a lease. That is, if the contract
conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
58 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (cont’d)
2.3 Summary of significant accounting policies (cont’d)
(q) Leases (cont’d)
Group as a lessee
The Group applies a single recognition and measurement approach for all
leases, expect for short-term
leases and leases of low-value assets. The Group recognizes lease liabilities to make lease payments and
right-of-use assets representing the right to use the underlying assets.
(i) Right-of-use assets
the commencement date of
The Group recognizes right-of-use assets at
the date the
underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for any re-measurement of lease liabilities. The cost of
right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease
payments made at or before the commencement date less any lease incentives received. Right-of-use assets
are depreciated on a straight-line basis over the shorter of the lease term and estimated useful lives of the
assets, as follows:
the lease (i.e.,
•
•
•
Leasehold land
Building and office space
3 to 50 years
1 to 6 years
Office furniture, fittings and equipment
5 years
If ownership of the leased asset transfers to the Group at the end of the lease term or the cost reflects the
exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.
The right-of-use assets are also subjected to impairment. Refer to the accounting policies in Section
(o) Impairment of non-financial assets.
(ii) Lease liabilities
At the commencement date of the lease, the Group recognizes lease liabilities measured at the present value
of lease payments to be made over the lease term. The lease payments include fixed payments (including
in-substances fixed payments) less any lease incentives receivable, variable lease payments that depend on
an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments
also include the exercise price of a purchase option reasonably certain to be exercised by the Group and
payments of penalties for terminating the lease, if the lease term reflects the Group exercising the option to
terminate. Variable lease payments that do not depend on an index or a rate are recognized as expenses
(unless they are incurred to produce inventories) in the period in which the event or condition that triggers the
payment occurs.
ANNUAL REPORT 2021 59
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (cont’d)
2.3 Summary of significant accounting policies (cont’d)
(q) Leases (cont’d)
Group as a lessee (cont’d)
(ii) Lease liabilities (cont’d)
In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease
commencement date because the interest rate implicit in the lease is not readily determinable. After the
commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and
reduced for the lease payments made. In addition, the carrying amount of lease liabilities is re-measured if
there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future
payments resulting from a change in an index or rate used to determine such lease payments) or a change in
the assessment of an option to purchase the underlying assets.
(iii) Short-term leases
The Group applies the short-term lease recognition exemption to its short-term leases of land and building
(i.e., those leases that have a lease term of 12 months or less from the commencement date and do not
contain a purchase option). Lease payments on short-term leases are recognized as expense on a straight-
line basis over the lease term.
Group as a lessor
Leases in which the Group does not transfer substantially all the risks and rewards of ownership of an asset
are classified as operating leases. Rental income arising is accounted for on straight-line basis over the lease
terms and is included in revenue in the statement of profit or loss due to its operating nature. Initial direct
costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased
asset and recognized over the lease term on the same basis as rental income.
(r) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily
takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of
the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist
of interest and other costs that an entity incurs in connection with the borrowing of funds.
60 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (cont’d)
2.3 Summary of significant accounting policies (cont’d)
(s) Provisions
General
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a
past event, it is probable that an outflow of resources embodying economic benefits will be required to settle
the obligation and a reliable estimate can be made of the amount of the obligation. When the Group expects
some or all of a provision to be reimbursed, the reimbursement is recognized as a separate asset, but only
when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement
of profit or loss net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that
reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the
provision due to the passage of time is recognized as a finance cost.
Product warranty
The Group recognizes a liability at the time the product is sold, for the estimated future costs relating to the
assurance-type warranties, to be incurred under the lower of a warranty period or warranty mileage on
various engine models, on which the Group provides free repair and replacement. For on-road applications
engines, warranties extend for a duration (generally 3 to 36 months) or mileage (generally 5,000 to 300,000
kilometers), whichever materializes first. For other applications engines, warranties extend for a duration of
generally 3 to 36 months or running hours of 300 to 4,000 hours, whichever materializes first. Provisions for
warranty are primarily determined based on historical warranty cost per unit of engines sold adjusted for
specific conditions that may arise and the number of engines under warranty at each financial year. If the
nature, frequency and average cost of warranty claims change, the accrued liability for product warranty will
be adjusted accordingly.
Onerous contract
If the Group has a contract that is onerous, the present obligation under the contract is recognized and
measured as a provision. However, before a separate provision for an onerous contract is established, the
Group recognizes any impairment loss that has occurred on assets dedicated to that contract.
An onerous contract is a contract under which the unavoidable costs (i.e., the costs that the Group cannot
avoid because it has the contract) of meeting the obligations under the contract exceed the economic benefits
expected to be received under it. The unavoidable costs under a contract reflect the least net cost of exiting
from the contract, which is the lower of the cost of fulfilling it and any compensation or penalties arising from
failure to fulfil it. The cost of fulfilling a contract comprises the costs that relate directly to the contract (i.e.,
both incremental costs and an allocation of costs directly related to contract activities).
ANNUAL REPORT 2021 61
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (cont’d)
2.3 Summary of significant accounting policies (cont’d)
(t) Pensions and other post-employment benefits
Defined contribution plans
The Group participates in and makes contributions to the national pension schemes as defined by the laws of
the countries in which it has operations. The contributions are at a fixed proportion of the basic salary of the
staff. Contributions to defined contribution pension schemes are recognized as an expense in the period in
which the related services are performed.
Employee leave entitlement
Employee entitlements to annual leave are recognized as a liability when they are accrued to the employees.
The undiscounted liability for leave expected to be settled wholly before twelve months after the end of the
reporting period is recognized for services rendered by employees up to the end of the reporting period.
(u) Share-based payments
Employees (including senior executives) of the Group receive remuneration in the form of share-based
payments, whereby employees render services as consideration for equity instruments (“equity-settled
transactions”).
Equity-settled transactions
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made
using an appropriate valuation model, further details of which are given in Note 21.
That cost is recognized in “Staff costs”, together with a corresponding increase in performance share reserve
in equity, over the period in which the performance and/or service conditions are fulfilled (the vesting period).
The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting
date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number
of equity instruments that will ultimately vest. The expense or credit in the statement of profit or loss for a
period represents the movement in cumulative expense recognized as of the beginning and end of that
period.
No expense is recognized for awards that do not ultimately vest, except for equity-settled transactions for
which vesting is conditional upon a market or non-vesting condition. These are treated as vested irrespective
of whether the market or non-vesting condition is satisfied, provided that all other performance and/or service
conditions are satisfied.
62 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (cont’d)
2.3 Summary of significant accounting policies (cont’d)
(u) Share-based payments (cont’d)
Equity-settled transactions (cont’d)
When the terms of an equity-settled award are modified, the minimum expense recognized is the expense
had the terms not been modified, provided the original terms of the award are met. An additional expense,
measured as of the date of modification, is recognized for any modification that increases the total fair value
of the share-based payment transaction, or is otherwise beneficial to the employee. Where an award is
cancelled by the entity or by the counterparty, any remaining element of the fair value of the award is
expensed immediately through profit or loss.
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted
earnings per share (further details are given in Note 9).
(v) Development properties
Development properties are properties acquired or being constructed for sale in the ordinary course of
business, rather than to be held for the Group’s own use, rental or capital appreciation.
Development properties are held as other asset and are measured at the lower of cost and net realizable
value.
Costs to complete development include cost of land and other direct and related development expenditure,
including borrowing costs incurred in developing the properties.
Net realizable value of development properties is the estimated selling price in the ordinary course of
business, based on market prices at the reporting date and discounted for the time value of money if material,
less the estimated costs of completion and the estimated costs necessary to make the sale.
The costs of development properties recognized in profit or loss on disposal are determined with reference to
the specific costs incurred on the property sold and an allocation of any non-specific costs based on the
relative size of the property sold.
(w) Derivative financial instruments
Initial recognition and subsequent measurement
The Group uses derivative financial instruments, such as forward currency contracts, to hedge its foreign
currency risks. Such derivative financial instruments are initially recognized at fair value on the date on which
a derivative contract is entered into and are subsequently re-measured at fair value through profit or loss.
Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the
fair value is negative.
ANNUAL REPORT 2021 63
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (cont’d)
2.4 Changes in accounting policies and disclosures
New and amended standards and interpretations
The Group applied for the first-time certain standards and amendments, which are effective for annual periods
beginning on or after January 1, 2021. The Group has not early adopted any other standard, interpretation or
amendment that has been issued but is not yet effective.
Interest Rate Benchmark Reform – Phase 2: Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and
IFRS 16
The amendments provide temporary reliefs which address the financial reporting effects when an interbank offered
rate (IBOR) is replaced with an alternative nearly risk-free interest rate (RFR). The amendments include the
following practical expedients:
•
•
•
A practical expedient to require contractual changes, or changes to cash flows that are directly required by
the reform, to be treated as changes to a floating interest rate, equivalent to a movement in a market rate of
interest
Permit changes required by IBOR reform to be made to hedge designations and hedge documentation
without the hedging relationship being discontinued
Provide temporary relief to entities from having to meet the separately identifiable requirement when an RFR
instrument is designated as a hedge of a risk component
These amendments had no impact on the consolidated financial statements of the Group.
Covid-19-Related Rent Concessions beyond June 30, 2021 Amendments to IFRS 16
On May 28, 2020, the IASB issued Covid-19-Related Rent Concessions—amendment to IFRS 16 Leases. The
amendments provide relief to lessees from applying IFRS 16 guidance on lease modification accounting for rent
concessions arising as a direct consequence of the Covid-19 pandemic. As a practical expedient, a lessee may
elect not to assess whether a Covid-19 related rent concession from a lessor is a lease modification. A lessee that
makes this election accounts for any change in lease payments resulting from the Covid-19 related rent concession
the same way it would account for the change under IFRS 16, if the change were not a lease modification.
The amendment was intended to apply until June 30, 2021, but as the impact of the Covid-19 pandemic is
continuing, on March 31, 2021, the IASB extended the period of application of the practical expedient to June 30,
2022. The amendment applies to annual reporting periods beginning on or after April 1, 2021.
However, the Group has not received Covid-19-related rent concessions, but plans to apply the practical expedient
if it becomes applicable within allowed period of application.
64 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (cont’d)
2.5 Standards issued but not yet effective
The new and amended standards and interpretations that are issued, but not yet effective are disclosed below. The
Group intends to adopt these new and amended standards and interpretations, if applicable, when they become
effective.
Amendments to IAS 1: Classification of Liabilities as Current or Non-current
In January 2020, the IASB issued amendments to paragraphs 69 to 76 of IAS 1 to specify the requirements for
classifying liabilities as current or non-current. The amendments clarify:
•
•
•
•
What is meant by a right to defer settlement
That a right to defer must exist at the end of the reporting period
That classification is unaffected by the likelihood that an entity will exercise its deferral right
That only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a
liability not impact its classification
The amendments are effective for annual reporting periods beginning on or after January 1, 2023 and must be
applied retrospectively. The Group is currently assessing the impact the amendments will have on current practice
and whether existing loan agreements may require renegotiation.
Reference to the Conceptual Framework – Amendments to IFRS 3
In May 2020, the IASB issued Amendments to IFRS 3 Business Combinations - Reference to the Conceptual
Framework. The amendments are intended to replace a reference to the Framework for the Preparation and
Presentation of Financial Statements, issued in 1989, with a reference to the Conceptual Framework for Financial
Reporting issued in March 2018 without significantly changing its requirements.
The Board also added an exception to the recognition principle of IFRS 3 to avoid the issue of potential “day 2”
gains or losses arising for liabilities and contingent liabilities that would be within the scope of IAS 37 or IFRIC 21
Levies, if incurred separately.
At the same time, the Board decided to clarify existing guidance in IFRS 3 for contingent assets that would not be
affected by replacing the reference to the Framework for the Preparation and Presentation of Financial Statements.
The amendments are effective for annual reporting periods beginning on or after January 1, 2022 and apply
prospectively. The amendments are not expected to have a material impact on the Group.
ANNUAL REPORT 2021 65
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (cont’d)
2.5 Standards issued but not yet effective (cont’d)
Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16
In May 2020, the IASB issued Property, Plant and Equipment — Proceeds before Intended Use, which prohibits
entities deducting from the cost of an item of property, plant and equipment, any proceeds from selling items
produced while bringing that asset to the location and condition necessary for it to be capable of operating in the
manner intended by management. Instead, an entity recognizes the proceeds from selling such items, and the
costs of producing those items, in profit or loss.
The amendment is effective for annual reporting periods beginning on or after January 1, 2022 and must be
applied retrospectively to items of property, plant and equipment made available for use on or after the beginning
of the earliest period presented when the entity first applies the amendment. The amendments are not expected to
have a material impact on the Group.
Onerous Contracts – Costs of Fulfilling a Contract – Amendments to IAS 37
In May 2020, the IASB issued amendments to IAS 37 to specify which costs an entity needs to include when
assessing whether a contract is onerous or loss-making.
The amendments apply a “directly related cost approach”. The costs that relate directly to a contract to provide
goods or services include both incremental costs and an allocation of costs directly related to contract activities.
General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly
chargeable to the counterparty under the contract.
The amendments are effective for annual reporting periods beginning on or after January 1, 2022. The Group will
apply these amendments to contracts for which it has not yet fulfilled all its obligations at the beginning of the
annual reporting period in which it first applies the amendments. The amendments are not expected to have a
material impact on the Group.
IFRS 1 First-time Adoption of International Financial Reporting Standards – Subsidiary as a
first-time adopter
As part of its 2018-2020 annual improvements to IFRS standards process, the IASB issued an amendment to IFRS
1 First-time Adoption of International Financial Reporting Standards. The amendment permits a subsidiary that
elects to apply paragraph D16(a) of IFRS 1 to measure cumulative translation differences using the amounts
reported by the parent, based on the parent’s date of transition to IFRS. This amendment is also applied to an
associate or joint venture that elects to apply paragraph D16(a) of IFRS 1.
The amendment is effective for annual reporting periods beginning on or after January 1, 2022 with earlier adoption
permitted. The amendments are not expected to have a material impact on the Group.
66 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (cont’d)
2.5 Standards issued but not yet effective (cont’d)
IFRS 9 Financial Instruments – Fees in the “10 per cent” test for de-recognition of financial
liabilities
As part of its 2018-2020 annual improvements to IFRS standards process the IASB issued amendment to IFRS 9.
The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified
financial liability are substantially different from the terms of the original financial liability. These fees include only
those paid or received between the borrower and the lender, including fees paid or received by either the borrower
or lender on the other’s behalf. An entity applies the amendment to financial
liabilities that are modified or
exchanged on or after the beginning of the annual reporting period in which the entity first applies the amendment.
The amendment is effective for annual reporting periods beginning on or after January 1, 2022 with earlier adoption
permitted. The Group will apply the amendments to financial liabilities that are modified or exchanged on or after
the beginning of the annual reporting period in which the entity first applies the amendment. The amendments are
not expected to have a material impact on the Group.
Definition of Accounting Estimates – Amendments to IAS 8
In February 2021, the IASB issued amendments to IAS 8, in which it introduces a definition of ‘accounting
estimates’. The amendments clarify the distinction between changes in accounting estimates and changes in
accounting policies and the correction of errors. Also, they clarify how entities use measurement techniques and
inputs to develop accounting estimates.
The amendments are effective for annual reporting periods beginning on or after January 1, 2023 and apply to
changes in accounting policies and changes in accounting estimates that occur on or after the start of that period.
Earlier application is permitted as long as this fact is disclosed.
The amendments are not expected to have a material impact on the Group.
Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement 2
In February 2021, the IASB issued amendments to IAS 1 and IFRS Practice Statement 2 Making Materiality
Judgements,
in which it provides guidance and examples to help entities apply materiality judgements to
accounting policy disclosures. The amendments aim to help entities provide accounting policy disclosures that are
more useful by replacing the requirement for entities to disclose their ‘significant’ accounting policies with a
requirement to disclose their ‘material’ accounting policies and adding guidance on how entities apply the concept
of materiality in making decisions about accounting policy disclosures.
The amendments to IAS 1 are applicable for annual periods beginning on or after January 1, 2023 with earlier
application permitted. Since the amendments to the Practice Statement 2 provide non-mandatory guidance on the
application of the definition of material to accounting policy information, an effective date for these amendments is
not necessary.
ANNUAL REPORT 2021 67
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (cont’d)
2.5 Standards issued but not yet effective (cont’d)
Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement 2 (cont’d)
The Group is currently assessing the impact of the amendments to determine the impact they will have on the
Group’s accounting policy disclosures.
Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendments
to IAS 12
In May 2021, the IASB issued amendments to IAS 12, which narrow the scope of the initial recognition exception
under IAS 12, so that it no longer applies to transactions that give rise to equal taxable and deductible temporary
differences.
The amendments clarify that where payments that settle a liability are deductible for tax purposes, it is a matter of
judgement (having considered the applicable tax law) whether such deductions are attributable for tax purposes to
the liability recognized in the financial statements (and interest expense) or to the related asset component (and
interest expense). This judgement is important in determining whether any temporary differences exist on initial
recognition of the asset and liability.
Under the amendments, the initial recognition exception does not apply to transactions that, on initial recognition,
give rise to equal taxable and deductible temporary differences. It only applies if the recognition of a lease asset
and lease liability (or decommissioning liability and decommissioning asset component) give rise to taxable and
deductible temporary differences that are not equal.
Nevertheless, it is possible that the resulting deferred tax assets and liabilities are not equal (e.g., if the entity is
unable to benefit from the tax deductions or if different tax rates apply to the taxable and deductible temporary
differences). In such cases, which the IASB expects to occur infrequently, an entity would need to account for the
difference between the deferred tax asset and liability in profit or loss.
The amendment is effective for annual reporting periods beginning on or after January 1, 2023. The amendments
are not expected to have a material impact on the Group.
3.
SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the Group’s consolidated financial statements requires management to make judgments,
estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, the
accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and
estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities
affected in future periods.
68 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
3.
SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS (cont’d)
Other disclosures relating to the Group’s exposure to risks and uncertainties includes:
•
•
•
Capital management (Note 32)
Financial risk management objectives and policies (Note 31)
Sensitivity analyses disclosures (Note 12 and 31)
3.1 Judgments
In the process of applying the Group’s accounting policies, management has made the following judgments, which
have the most significant effect on the amounts recognized in the consolidated financial statements:
Revenue from Contracts with Customers
The Group applied the following judgments that significantly affect the determination of the amount and timing of
revenue from contracts with customers:
•
Identifying contract price and performance obligations in sales of engines
The Group provides certain warranties for both general repairs and maintenance service as part of the sales of
engines. For general repairs, such warranties will be assurance-type warranty that will continue to be accounted for
under IAS 37 Provisions, Contingent Liabilities and Contingent Assets. For maintenance services, it will be
accounted for as a service-type warranties that are capable of being distinct and customers can benefit from the
service on its own. Hence, the Group identified two separate performance obligation, one is the promise to transfer
the engine and the other one is to provide maintenance services after reaching certain on-road mileage or running
hours. Consequently, the Group allocated a portion of the transaction price to the engines and the maintenance
services based on a combination of expected cost plus a margin and residual approaches. Please refer to
Note 6.3.
Derecognition of bills receivable
The Group sell certain bills receivable to banks on an ongoing basis depending on funding needs and money
market conditions. While the buyer is responsible for servicing the receivables upon maturity of the bills receivable,
Chinese law governing bills allows recourse to be traced to all the parties in the discounting process. In relation to
the derecognition of bills receivable when discounted, the management believes that the contractual right to
receive the cash flows from the asset have terminated with the Group, but transferred to the banks. Accordingly,
bills receivable are derecognized, and a discount equal to the difference between the carrying value of the bills
receivable and cash received is recorded in the statement of profit or loss. Please refer to Note 15.
ANNUAL REPORT 2021 69
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
3.
SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS (cont’d)
3.1 Judgments (cont’d)
Deferred tax assets
Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be
available against which the losses can be utilized. Significant management judgment is required to determine the
amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable
profits together with future tax planning strategies. The carrying amounts of deferred tax assets as of
December 31, 2020 and 2021 are RMB 400.2 million and RMB 398.2 million (US$ 63.0 million) respectively, and
primarily relate to unutilized capital allowances and investment allowances, as well as other unrecognized
temporary differences relating to asset impairment and deferred grants. If the Group was able to recognize all
unrecognized deferred tax assets, profit would increase by RMB 159.2 million (US$ 25.2 million) for year ended
December 31, 2021 (2020: RMB 157.6 million).
Development costs
Development costs are capitalized in accordance with the accounting policy in Note 2.3 (l). Capitalization of
development costs requires the application of management judgment to determine, what continues to constitute
development activities and when a development project should cease further capitalization of development costs.
Management judgment is also required to ascertain the nature of expenses that qualify for capitalization.
3.2 Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date,
that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within
the next financial year, are described below. The Group based its assumptions and estimates on parameters
available when the consolidated financial statements were prepared. Existing circumstances and assumptions
about future developments, however, may change due to market changes or circumstances arising that are beyond
the control of the Group. Such changes are reflected in the assumptions when they occur.
Impairment of non-financial assets
Impairment exists when the carrying value of an asset or cash-generating unit exceeds its recoverable amount,
which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal
calculation is based on available data from binding sales transactions, conducted at arm’s length, for similar assets
or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based
on a discounted cash flow (“DCF”) model. The cash flows are derived from the forecasts for the next eight to ten
years and do not include restructuring activities that the Group is not yet committed to or significant future
investments that will enhance the asset’s performance of the CGU being tested. The Group, based on its history of
operations, believes that the adoption of forecast for more than five years is reasonable. The recoverable amount
is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth
rate used for extrapolation purposes. These estimates are most relevant to goodwill, development costs and
trademarks recognized by the Group. The key assumptions used to determine the recoverable amount for the
different CGUs and assets, including a sensitivity analysis, are disclosed and further explained in Note 12.
70 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
4.
INVESTMENTS IN SUBSIDIARIES
Details of significant subsidiaries of the Group are as follows:
Name of significant subsidiary
Place of
incorporation/
business
Group’s effective
equity interest
31.12.2020 31.12.2021
Guangxi Yuchai Machinery Company Limited
Guangxi Yuchai Machinery Monopoly Development Co.,
People’s Republic of China
Ltd
Guangxi Yuchai Accessories Manufacturing Company
Limited
Guangxi Yulin Hotel Company Limited
HL Global Enterprises Limited
People’s Republic of China
People’s Republic of China
People’s Republic of China
Singapore
%
76.4
54.9
76.4
76.4
50.2
%
76.4
54.9
76.4
76.4
50.2
The Group has the following subsidiary that has non-controlling interests (“NCI”) that are material to the Group.
Proportion of equity interest held by NCI
Yuchai
31.12.2019
31.12.2020
31.12.2021
23.6%
23.6%
23.6%
31.12.2019 31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
RMB’000
Accumulated balances of material NCI
Yuchai
Profit allocated to material NCI
Yuchai
Dividends paid to material NCI
Yuchai
2,603,227
2,624,933
2,574,669
407,243
254,284
229,231
153,500
24,280
207,514
207,514
203,753
32,228
ANNUAL REPORT 2021 71
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
4.
INVESTMENTS IN SUBSIDIARIES (cont’d)
Summarized financial
intercompany eliminations of subsidiaries with material non-controlling interests are as follows:
information including goodwill on acquisition and consolidation adjustments but before
Summarized statement of comprehensive income
Revenue
Profit after tax
Total comprehensive income for the year
Attributable to NCI
Summarized statement of cash flows
Operating
Investing
Financing
Net increase in cash and cash equivalents
Summarized statement of financial position
Current assets
Non-current assets, excluding goodwill
Goodwill
Current liabilities
Non-current liabilities
Net assets
Total equity
Attributable to NCI
Summarized statement of comprehensive income
Revenue
Profit after tax
Total comprehensive income for the year
Attributable to NCI
Summarized statement of cash flows
Operating
Investing
Financing
Net increase in cash and cash equivalents
31.12.2019
Yuchai
RMB’000
17,980,304
825,807
828,861
254,284
1,632,557
(858,904)
(656,576)
117,077
31.12.2020
Yuchai
RMB’000
18,395,754
6,722,233
212,636
(13,035,680)
(1,293,007)
11,001,936
11,001,936
2,624,933
20,557,660
829,042
826,214
229,231
1,476,034
(794,291)
(505,997)
175,746
72 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
4.
INVESTMENTS IN SUBSIDIARIES (cont’d)
Summarized statement of financial position
Current assets
Non-current assets, excluding goodwill
Goodwill
Current liabilities
Non-current liabilities
Net assets
Total equity
Attributable to NCI
Summarized statement of comprehensive income
Revenue
Profit after tax
Total comprehensive income for the year
Attributable to NCI
Summarized statement of cash flows
Operating
Investing
Financing
Net increase in cash and cash equivalents
Significant restrictions
31.12.2021
Yuchai
RMB’000
US$’000
17,067,747
6,812,500
212,636
(12,620,344)
(781,986)
2,699,653
1,077,552
33,633
(1,996,195)
(123,689)
10,690,553
1,690,954
10,690,553
1,690,954
2,574,669
407,243
21,254,134
3,361,826
443,499
506,769
153,500
70,149
80,157
24,280
588,727
(674,686)
(1,002,764)
93,121
(106,717)
(158,610)
(1,088,723)
(172,206)
The nature and extent of significant restrictions on the Group’s ability to use or access assets and settle liabilities of
subsidiaries with material non-controlling interests are:
the end of
At
the reporting period, cash and cash equivalents of RMB 4,200.5 million (US$ 664.4 million)
(2020: RMB 5,289.2 million) held in the PRC are subject to local exchange control regulations. These regulations
place restriction on the amount of currency being exported other than through dividends, trade and service related
transactions.
Acquisition of ownership in subsidiaries, without change in control in 2019
In February 2019, Yuchai acquired 7.5% of equity interest
from
non-controlling interest for a cash consideration of RMB 0.1 million. As a result, Yuchai’s shareholding in YC
Europe increased from 67.5% to 75.0%.
in YC Europe Co., Ltd.
(“YC Europe”)
ANNUAL REPORT 2021 73
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
5.
INVESTMENT IN JOINT VENTURES
Share of profit/(loss) of joint ventures, net of tax:
Y & C Engine Co., Ltd
MTU Yuchai Power Co., Ltd.
Eberspaecher Yuchai Exhaust Technology Co., Ltd
Other joint ventures
Carrying amount of investments:
Y & C Engine Co., Ltd
MTU Yuchai Power Co., Ltd
Eberspaecher Yuchai Exhaust Technology Co., Ltd
Other joint ventures
The Group has interests in the following joint ventures:
Name of company
Principal activities
31.12.2019 31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
RMB’000
28,484
594
(9,366)
(497)
19,215
(44,016)
3,238
(19,157)
513
(125,853)
28,037
1,377
454
(19,907)
4,435
218
72
(59,422)
(95,985)
(15,182)
31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
145,599
62,217
12,638
6,666
227,120
22,821
89,481
31,655
7,138
151,095
3,610
14,153
5,007
1,129
23,899
Place of
incorporation/
business
Group’s effective
equity interest
31.12.2020 31.12.2021
%
%
Held by subsidiaries
HL Heritage Sdn. Bhd.
Shanghai Hengshan Equatorial
Hotel Management Co., Ltd.
Y & C Engine Co., Ltd (“Y&C”)
Property development and
Malaysia
property investment holdings
Hotel and property management
Manufacture and sale of heavy
duty diesel engines, spare
parts and after-sales services
Guangxi Yineng IOT Science &
Design, development,
Technology Co., Ltd.
management and marketing
of an electronic operations
management platform
MTU Yuchai Power Co., Ltd
(“MTU Yuchai Power”)
Manufacture off-road diesel
engines
Eberspaecher Yuchai Exhaust
Application development,
Technology Co. Ltd
(“Eberspaecher Yuchai”)
production, sales and service
on engine exhaust control
systems
People’s
Republic of
China
People’s
Republic of
China
People’s
Republic of
China
People’s
Republic of
China
People’s
Republic of
China
30.1
24.6
30.1
24.6
34.4
34.4
15.3
15.3
38.2
38.2
37.4
37.4
74 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
5.
INVESTMENT IN JOINT VENTURES (cont’d)
The Group assess impairment of investments when adverse events or changes in circumstances indicate that the
carrying amounts may not be recoverable. If the recoverable amount of investment is below its carrying amount, an
impairment charge is recognized. The Group performs evaluation of the value of its investment using a discounted
cash flows projection or fair value less cost of disposal where appropriate. The projection will be performed using
historical trends as a reference and certain assumptions to project the future streams of cash flows.
In 2020 and 2021, the Group has performed an impairment evaluation of its investments in joint ventures and no
impairment was required.
Revenue
Depreciation and amortization
Interest expense
Profit/(loss) for the year, representing total
comprehensive income for the year
Proportion of the Group’s ownership
Group’s share of profit/(loss)
Unrealized profit on transactions with joint venture
Group’s share of profit/(loss) of significant joint
ventures
Group’s share of loss of other joint ventures,
representing the Group’s share of total
comprehensive loss of other joint ventures
Group’s share of profit for the year,
representing the Group’s share of total
comprehensive income for the year
31.12.2019
MTU
Yuchai Power
RMB’000
Eberspaecher
Yuchai
RMB’000
178,796
(6,379)
(5,017)
3,509
(25)
–
Y & C
RMB’000
2,404,244
(26,099)
(29,606)
Total
RMB’000
2,586,549
(32,503)
(34,623)
44,484
45%
20,018
8,466
28,484
600
50%
300
294
594
(19,114)
25,970
49%
(9,366)
–
(9,366)
19,712
(497)
19,215
ANNUAL REPORT 2021 75
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
5.
INVESTMENT IN JOINT VENTURES (cont’d)
31.12.2020
MTU
Yuchai Power
RMB’000
Eberspaecher
Yuchai
RMB’000
Non-current assets
Current assets
- Cash and bank balances
- Others
Total assets
Non-current liabilities
Current liabilities
Total liabilities
Equity
Y & C
RMB’000
740,423
160,844
1,287,935
2,189,202
(417,759)
(1,340,704)
(1,758,463)
430,739
71,635
43,056
266,123
380,814
–
(244,963)
(244,963)
135,851
Total
RMB’000
857,641
206,173
1,597,953
2,661,767
45,583
2,273
43,895
91,751
–
(65,960)
(417,759)
(1,651,627)
(65,960)
(2,069,386)
25,791
592,381
Proportion of the Group’s ownership
45%
50%
49%
Group’s share of net assets
Unrealized profit on transactions with joint venture
Carrying amount of significant joint ventures
Carrying amount of other joint ventures
Carrying amount of the investment in joint
ventures
193,833
(48,234)
145,599
67,926
(5,709)
62,217
12,638
–
12,638
220,454
6,666
227,120
Total
RMB’000
3,375,542
(62,116)
(42,692)
31.12.2020
MTU
Yuchai Power
RMB’000
Eberspaecher
Yuchai
RMB’000
307,699
(2,350)
(1,983)
45,966
(360)
–
Y & C
RMB’000
3,021,877
(59,406)
(40,709)
(88,785)
6,421
(39,095)
(121,459)
45%
(39,953)
(4,063)
50%
3,211
27
49%
(19,157)
–
Revenue
Depreciation and amortization
Interest expense
Profit/(loss) for the year, representing total
comprehensive income for the year
Proportion of the Group’s ownership
Group’s share of profit/(loss)
Unrealized profit on transactions with joint venture
Group’s share of profit/(loss) of significant joint
ventures
(44,016)
3,238
(19,157)
(59,935)
Group’s share of profit of other joint ventures,
representing the Group’s share of total
comprehensive loss of other joint ventures
Group’s share of loss for the year,
representing the Group’s share of total
comprehensive loss for the year
513
(59,422)
76 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
5.
INVESTMENT IN JOINT VENTURES (cont’d)
Non-current assets
Current assets
- Cash and bank balances
- Others
Total assets
Non-current liabilities
Current liabilities
Total liabilities
Equity
MTU
Yuchai Power
RMB’000
31.12.2021
Eberspaecher
Yuchai
RMB’000
Total
Total
RMB’000 US$’000
89,749
71,858
822,463 130,091
63,609
310,394
463,752
–
(271,521)
2,105
99,352
245,493
38,830
1,227,718 194,192
173,315
2,295,674 363,113
(14,109)
(94,604)
(376,888)
(59,613)
(1,513,541) (239,401)
Y & C
RMB’000
660,856
179,779
817,972
1,658,607
(362,779)
(1,147,416)
(1,510,195)
(271,521)
(108,713)
(1,890,429) (299,014)
148,412
192,231
64,602
405,245
64,099
Proportion of the Group’s ownership
45%
50%
49%
Group’s share of net assets
Unrealized profit on transactions with joint
venture
Carrying amount of significant joint ventures
Carrying amount of other joint ventures
Carrying amount of the investment in
joint ventures
66,785
96,116
31,655
(43,964)
22,821
(6,635)
89,481
–
31,655
143,957
22,770
7,138
1,129
151,095
23,899
Revenue
Depreciation and amortization
Interest expense, net
Profit/(loss) for the year, representing total
comprehensive income for the year
MTU
Yuchai Power
RMB’000
31.12.2021
Eberspaecher
Yuchai
RMB’000
Total
Total
RMB’000 US$’000
467,800
(2,377)
(1,850)
157,316
(709)
(41)
2,697,837 426,724
(8,852)
(8,498)
(55,967)
(53,727)
Y & C
RMB’000
2,072,721
(52,881)
(51,836)
(282,205)
54,526
2,811
(224,868)
(35,568)
Proportion of the Group’s ownership
45%
50%
(126,992)
27,263
49%
1,377
Group’s share of profit/(loss)
Unrealized profit on transactions with joint
venture
Group’s share of profit/(loss) of significant joint
1,139
774
–
ventures
(125,853)
28,037
1,377
(96,439)
(15,254)
Group’s share of loss of other joint ventures,
representing the Group’s share of total
comprehensive loss of other joint ventures
Group’s share of loss for the year,
representing the Group’s share of
total comprehensive loss for the year
454
72
(95,985)
(15,182)
ANNUAL REPORT 2021 77
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
5.
INVESTMENT IN JOINT VENTURES (cont’d)
Note:
As of December 31, 2021, the Group’s share of joint ventures’ capital commitment that are contracted but not paid
was RMB 7.0 million (US$ 1.1 million) (2020: RMB 2.1 million).
As of December 31, 2021, the Group’s share of outstanding bills receivables discounted with banks for which
Y & C retained a recourse obligation totaled RMB 213.9 million (US$ 33.8 million) (2020: RMB 40.1 million).
As of December 31, 2021, the Group’s share of outstanding bills receivables endorsed to suppliers for which Y & C
retained a recourse obligation were RMB 33.1 million (US$ 5.2 million) (2020: RMB 58.4 million).
Significant restrictions
The nature and extent of significant restrictions on the Group’s ability to use or access assets and settle liabilities of
joint ventures are:
The Group’s share of cash and cash equivalents of RMB 39.6 million (US$ 6.3 million) (2020: RMB 30.4 million)
held in the PRC are subject to local exchange control regulations. These regulations places restriction on the
amount of currency being exported other than through dividends, trade and service related transactions.
As of December 31, 2021, the Group’s share of restricted cash of RMB 74.5 million (US$ 11.8 million) (2020:
RMB 65.2 million) which was used as collateral by the banks for the issuance of bills to suppliers.
As of December 31, 2021, the Group’s share of bills receivables of RMB 22.0 million (US$ 3.5 million) (2020:
RMB 28.6 million) which was used as collateral by banks for the issuance of bills to suppliers.
78 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
6. REVENUE FROM CONTRACTS WITH CUSTOMERS
6.1 Disaggregated revenue information
Set out below is the disaggregation of the Group’s revenue from contracts with customers:
Segments
Type of goods or services
Heavy-duty engines
Medium-duty engines
Light-duty engines
Other products and services (i)
Revenue from hospitality operations
31.12.2019
HLGE
RMB’000 RMB’000
Yuchai
6,189,934
5,583,982
2,429,248
3,732,436
44,704
–
–
–
–
35,781
Total
RMB’000
6,189,934
5,583,982
2,429,248
3,732,436
80,485
Total revenue from contracts with customers
17,980,304
35,781 18,016,085
Geographical markets
People’s Republic of China
Other countries
Total revenue from contracts with customers
Timing of revenue recognition
At a point in time
Over time
Total revenue from contracts with customers
Segments
Type of goods or services
Heavy-duty engines
Medium-duty engines
Light-duty engines
Other products and services (i)
Revenue from hospitality operations
17,913,615
66,689
– 17,913,615
102,470
35,781
17,980,304
35,781 18,016,085
17,935,600
44,704
– 17,935,600
80,485
35,781
17,980,304
35,781 18,016,085
31.12.2020
HLGE
RMB’000 RMB’000
Yuchai
6,725,312
6,626,629
2,356,168
4,809,921
39,630
–
–
–
–
23,510
Total
RMB’000
6,725,312
6,626,629
2,356,168
4,809,921
63,140
Total revenue from contracts with customers
20,557,660
23,510 20,581,170
Geographical markets
People’s Republic of China
Other countries
Total revenue from contracts with customers
Timing of revenue recognition
At a point in time
Over time
Total revenue from contracts with customers
20,504,288
53,372
– 20,504,288
76,882
23,510
20,557,660
23,510 20,581,170
20,518,030
39,630
– 20,518,030
63,140
23,510
20,557,660
23,510 20,581,170
ANNUAL REPORT 2021 79
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
6. REVENUE FROM CONTRACTS WITH CUSTOMERS (cont’d)
6.1 Disaggregated revenue information (cont’d)
Segments
Type of goods or services
Heavy-duty engines
Medium-duty engines
Light-duty engines
Other products and services (i)
Revenue from hospitality operations
31.12.2021
Yuchai
HLGE
RMB’000 RMB’000
Total
RMB’000
Total
US$’000
7,410,771
7,065,283
2,429,745
4,304,918
43,417
–
–
–
77
11,719
7,410,771 1,172,182
7,065,283 1,117,535
384,320
2,429,745
680,933
4,304,995
8,721
55,136
Total revenue from contracts with customers
21,254,134
11,796 21,265,930 3,363,691
Geographical markets
People’s Republic of China
Other countries
21,206,280
47,854
– 21,206,280 3,354,256
9,435
59,650
11,796
Total revenue from contracts with customers
21,254,134
11,796 21,265,930 3,363,691
Timing of revenue recognition
At a point in time
Over time
21,210,718
43,416
8,067 21,218,785 3,356,234
7,457
47,145
3,729
Total revenue from contracts with customers
21,254,134
11,796 21,265,930 3,363,691
Note:
(i)
included sales of power generator sets, engine components, service-type maintenance services and others.
6.2 Contract balances
Trade receivables (Note 15)
Capitalized contract cost
Contract liabilities (Note 24)
31.12.2020
RMB’000
31.12.2021
RMB’000
31.12.2021
US$’000
289,048
127,704
935,462
524,557
147,499
642,432
82,971
23,330
101,615
Trade receivables are non-interest bearing and are generally on terms of 60 - 90 days.
The contract
liabilities comprise short-term advance received from customers and unfulfilled service-type
maintenance service. The advance received from customers is recognized as revenue upon the delivery of goods,
and the contract liability arising from unfulfilled service-type warranty is recognized upon the completion of the
maintenance services. According to the business customary practice, the remaining performance obligations
(unfulfilled service-type maintenance service) at the year-end is expected to be satisfied within 2 years.
The significant decrease in contract liabilities as at December 31, 2021 was mainly due to lower advance payment
from customers as of the year-end for future product deliveries.
80 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
6. REVENUE FROM CONTRACTS WITH CUSTOMERS (cont’d)
6.2 Contract balances (cont’d)
(a) Set out below is the amount of revenue recognized from:
Amounts include in contract liabilities
(b) Capitalized contract costs
Capitalized contract costs relating to service fee charge on
development of technology know-how
At January 1
Addition
Reclassified to development costs
Released to consolidated statement of profit or loss
At December 31
6.3 Performance obligations
31.12.2020
RMB’000
31.12.2021
RMB’000
31.12.2021
US$’000
363,464
874,391
138,305
31.12.2020
RMB’000
31.12.2021
RMB’000
31.12.2021
US$’000
136,457
24,147
(21,519)
(11,381)
127,704
127,704
19,795
–
–
147,499
20,199
3,131
–
–
23,330
The transaction price allocated to the remaining unsatisfied performance obligations as of 31 December are, as
follows:
Within one year
More than one year
Total unfulfilled service-type maintenance service (Note 24)
31.12.2020
RMB’000
31.12.2021
RMB’000
31.12.2021
US$’000
112,454
67,269
179,723
140,601
69,172
209,773
22,239
10,941
33,180
As of December 31, 2020, the remaining performance obligations (unfulfilled maintenance service) were expected
to be satisfied within three years.
In 2021, the Group has reassessed the future satisfaction period relating to the remaining performance obligations
related to the unfulfilled service-type maintenance service. Based on the business development and latest data, the
Group expects that the remaining performance obligation as of December 31, 2021, to be recognized within 2
years, and accordingly has applied the change of management estimation prospectively. As a result, RMB 36.7
million (US$ 5.8 million) was credited to consolidated statement of profit or loss under “revenue” and lower the
contract liability (current) by RMB 36.7 million (US$ 5.8 million).
ANNUAL REPORT 2021 81
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
7.1 Depreciation, amortization, shipping and handling expenses
(a) Depreciation and amortization expenses
31.12.2019 31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
RMB’000
Amortization of intangible assets (i)
Depreciation of investment property
Depreciation of property, plant and equipment
Depreciation of right-of-use assets (ii)
1,012
380
422,859
40,958
465,209
1,012
376
450,092
43,127
494,607
38,957
355
492,826
41,458
573,596
6,162
56
77,952
6,558
90,728
Note:
(i)
(ii)
The higher amortization charges in 2021 is mainly due to the amortization charged on additional Technology
Know-how recognized during the year which are transferred from Group capitalized development cost upon
completion and ready for use.
In 2020, COVID-19 related rent rebate received from lessors of RMB 0.2 million has been offset against the
depreciation of right-of-use assets.
Depreciation and amortization expenses are included in the following captions:
31.12.2019 31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
RMB’000
Cost of sales
Research and development expenses
Selling, general and administrative expenses
(b) Shipping and handling expenses
315,445
16,470
133,294
465,209
327,866
26,815
139,926
494,607
381,248
41,835
150,513
573,596
60,303
6,618
23,807
90,728
Sales related shipping and handling expenses not separately billed to customers are included in the following
caption:
Selling, general and administrative expenses
221,255
237,683
224,292
35,477
31.12.2019 31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
RMB’000
82 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
7.2 (a) Other operating income
31.12.2019 31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
RMB’000
Interest income
Dividend income from quoted equity securities
Gain on disposal of:
- property, plant and equipment
- quoted equity securities
- right-of-use assets
Government grants
Fair value gain on quoted equity securities
Fair value gain on foreign exchange forward contract
Realised foreign exchange gain, net
Unrealised foreign exchange gain, net
Others
177,261
959
–
11,528
9,237
122,371
1,118
–
3,604
4,679
16,404
347,161
166,970
166
–
874
2,574
209,793
–
999
1,390
1,827
15,676
400,269
132,083
168
1,224
5,416
14,714
152,932
138
–
–
–
19,496
326,171
20,892
26
194
857
2,327
24,190
22
–
–
–
3,083
51,591
7.2 (b) Other operating expenses
31.12.2019 31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
RMB’000
Fair value loss on quoted equity securities
Fair value loss on foreign exchange forward contract
Loss on disposal of property, plant and equipment
Provision/(reversal) for onerous contract, net
Realised foreign exchange loss, net
Unrealised foreign exchange loss, net
Unrecoverable value added tax
Others
–
5,529
645
–
–
–
–
2,501
8,675
1,196
–
4,183
13,639
–
–
–
2,304
21,322
–
–
–
(8,810)
(1,532)
3,271
11,164
5,889
9,982
–
–
–
(1,394)
(242)
518
1,766
931
1,579
7.3 Finance costs
Bank term loans
Bills discounting
Bank charges
Interest on lease liabilities (Note 17)
31.12.2019 31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
RMB’000
76,721
47,212
4,945
2,918
95,357
49,738
3,877
2,198
82,109
27,864
4,136
1,819
131,796
151,170
115,928
12,987
4,408
654
288
18,337
ANNUAL REPORT 2021 83
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
7.4 Staff costs
31.12.2019 31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
RMB’000
Wages and salaries
Contribution to defined contribution plans
Executive bonuses
Staff welfare
Staff severance cost
Others
Staff costs are included in the following captions:
1,122,712
324,623
59,791
82,692
15,454
6,012
1,364,751
287,830
59,908
94,982
19,712
3,439
1,338,777
386,551
19,355
93,992
11,771
4,887
1,611,284
1,830,622
1,855,333
211,758
61,142
3,061
14,867
1,862
773
293,463
31.12.2019 31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
RMB’000
Cost of sales
Research and development expenses
Selling, general and administrative expenses
808,763
243,049
559,472
912,304
258,118
660,200
985,676
283,543
586,114
1,611,284
1,830,622
1,855,333
155,907
44,849
92,707
293,463
8.
INCOME TAX EXPENSE
The major components of income tax expense for the years ended December 31, 2019, 2020 and 2021 are as
follows:
31.12.2019 31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
RMB’000
Current income tax
- Current year
- Over provision in respect of prior years
Deferred tax
- Movement in temporary differences
- Over provision in respect of prior years
193,878
(6,985)
180,254
(124)
48,856
(21,523)
(14,274)
–
12,543
(135)
16,483
–
7,727
(3,404)
2,607
–
Consolidated income tax expense reported in the statement
of profit or loss
172,619
192,538
43,816
6,930
84 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
8.
INCOME TAX EXPENSE (cont’d)
Income tax expense reported in the consolidated statement of profit or loss differs from the amount computed by
applying the PRC income tax rate of 15% (being tax rate of Yuchai) for the years ended December 31, 2019, 2020
and 2021 for the following reasons:
31.12.2019 31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
RMB’000
Accounting profit before tax
Computed tax expense at 15%
Adjustments resulting from:
Non-deductible expenses
Tax-exempt income
Utilization of deferred tax benefits previously not recognized
Deferred tax benefits not recognized
Tax credits for research and development expense
Tax rate differential
Over provision in respect of previous years
Withholding tax expense
Others
Total
1,033,319
154,998
971,864
145,780
451,710
67,757
71,447
10,717
3,982
(6,171)
(5,076)
6,613
(31,863)
26,223
(6,985)
30,898
–
9,188
(601)
(1,996)
6,097
(26,329)
24,251
(259)
36,332
75
17,795
(2,181)
(29)
10,356
(59,633)
16,517
(21,523)
14,639
118
172,619
192,538
43,816
2,815
(345)
(5)
1,638
(9,432)
2,612
(3,404)
2,315
19
6,930
ANNUAL REPORT 2021 85
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
8.
INCOME TAX EXPENSE (cont’d)
Deferred tax
Deferred tax relates to the following:
Consolidated statement of financial position
31.12.2021
US$’000
31.12.2020
RMB’000
31.12.2021
RMB’000
Consolidated statement of profit or loss
31.12.2019 31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000 RMB’000 RMB’000
Accelerated tax depreciation
Interest receivable
PRC withholding tax on dividend
income (i)
Impairment of property, plant and
equipment
Effect of change in residual value
of property, plant and
equipment
Write-down of inventories
Allowance for doubtful account
receivables
Accruals
Deferred income
Losses available for offsetting
against future taxable income
Others
Deferred tax benefits/(expenses)
(100,802)
(1,937)
(138,770)
(3,396)
(21,950)
(537)
(17,366)
608
(55,882)
(293)
(37,968)
(1,459)
(6,006)
(231)
(112,456)
(65,544)
(10,367)
(30,721)
(36,255)
(14,529)
(2,298)
6,210
5,138
812
(9,295)
(438)
(1,072)
(170)
33,894
22,628
8,056
298,766
108,942
–
24,441
60,230
20,250
6,789
283,427
97,828
23,072
43,606
9,527
3,203
1,074
44,830
15,474
3,650
6,897
–
2,343
33,894
4,225
26,336
(2,378)
4,900
46,108
12,232
–
5,465
(2,021)
48,149
1,211
(1,267)
(15,339)
(11,114)
–
(4,998)
23,072
19,235
4,166
(376)
(200)
(2,426)
(1,758)
3,650
3,042
14,274
(12,408)
(16,483)
(2,607)
Net deferred tax assets
287,742
332,630
52,613
Reflected in the consolidated
statement of financial position
as follows:
Deferred tax assets
Deferred tax liabilities
400,198
(112,456)
287,742
398,174
(65,544)
332,630
62,980
(10,367)
52,613
Note:
(i)
The movement of PRC withholding tax on dividend income is as follows:
At January 1
Provision made to consolidated statement of profit or loss
Utilization
December 31
31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
(106,922)
(36,255)
30,721
(112,456)
(14,529)
61,441
(17,787)
(2,298)
9,718
(112,456)
(65,544)
(10,367)
86 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
8.
INCOME TAX EXPENSE (cont’d)
Deferred tax (cont’d)
The Corporate Income Tax (“CIT”) law provides for a tax of 10% to be withheld from dividends paid to foreign
investors of PRC enterprises. This withholding tax provision does not apply to dividends paid out of profit earned
prior to January 1, 2008. Beginning on January 1, 2008, a 10% withholding tax is imposed on dividends paid to the
Company, as a non-resident enterprise, unless an applicable tax treaty provides for a lower tax rate. The Company
recognizes a deferred tax liability for withholding tax payable for profits accumulated after December 31, 2007 for
the earnings that the Company does not plan to indefinitely reinvest in the PRC enterprises. As of December 31,
the deferred tax liability for withholding tax payable was RMB 65.5 million (US$ 10.4 million) (2020:
2021,
RMB 112.5 million). The amount of unrecognized deferred tax liability relating to undistributed earnings of the PRC
enterprises is estimated to be RMB 195.5 million (US$ 30.9 million) (2020: RMB 236.4 million).
Deferred tax assets have not been recognized in respect of the following items:
Unutilized tax losses
Unutilized capital allowances and investment allowances
Other unrecognized temporary differences relating to asset impairment
and deferred grants
31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
404,215
105,622
204,423
714,260
414,212
103,810
199,203
717,225
65,517
16,420
31,508
113,445
Unrecognized tax losses for the Group are subject to agreement with the tax authorities and compliance with tax
regulations in the respective countries in which the Group operates. The unutilized tax losses for PRC subsidiaries
and Malaysia subsidiaries expire within the next 5 to 10 years and 10 years, respectively. These losses may not be
used to offset taxable income elsewhere in the Group. Deferred tax assets have not been recognized in respect of
these items because it is not probable that future taxable profits will be available against which the Group can
utilize the benefits.
9.
EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the profit for the year attributable to ordinary equity holders of the
company by the weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share is calculated by dividing the profit attributable to ordinary equity holders of the company
by the weighted average number of ordinary shares outstanding during the year plus the weighted average number
of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary
shares.
ANNUAL REPORT 2021 87
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
9.
EARNINGS PER SHARE (cont’d)
Basic earnings per share
The calculation of basic earnings per share is based on:
31.12.2019 31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
RMB’000
Profit attributable to ordinary equity holders of the company
604,914
548,903
272,673
43,129
Weighted average number of ordinary shares
40,858,290 40,858,290 40,858,290 40,858,290
Diluted earnings per share
The weighted average number of ordinary shares adjusted for the effect of unissued ordinary shares under the
Share Option Scheme is determined as follows:
31.12.2019 31.12.2020 31.12.2021
Weighted average number of shares issued, used in the calculation of
basic earnings per share
Diluted effect of share options
40,858,290 40,858,290 40,858,290
–
–
–
Weighted average number of ordinary shares adjusted for effect of dilution
40,858,290 40,858,290 40,858,290
In 2021, 270,000 (2020: 470,000; 2019: 470,000) share options granted to employees under the existing employee
share option plan have not been included in the calculation of diluted earnings per share because they are anti-
dilutive.
There have been no other transactions involving ordinary shares or potential ordinary share since the reporting
date and before the completion of these financial statements.
88 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
10. PROPERTY, PLANT AND EQUIPMENT
Freehold
land
RMB’000
Leasehold
buildings and
improvements
RMB’000
Construction
in progress
Plant and
machinery
RMB’000 RMB’000
Office
furniture,
fittings and
equipment
Motor
and
transport
Total
vehicles
RMB’000 RMB’000 RMB’000
14,836
–
–
–
–
(744)
14,092
–
–
–
–
(628)
13,464
513
–
–
–
–
(26)
487
–
–
–
–
(30)
457
2,376,090
16,273
(4,664)
75,264
(9,759)
(3,825)
2,449,379
2,214
(5,435)
105,117
(1,551)
(3,439)
1,037,035 5,285,022
20,617
(260,996)
741,218
(53,917)
(459)
487,725
–
(823,981)
–
(63)
195,154 112,501 9,020,638
554,847
16,166
(274,006)
(4,742)
–
176
(73,571)
(912)
(6,088)
(131)
14,066
(3,604)
7,323
(8,983)
(866)
700,716 5,731,485
20,655
426,621
(81,321)
–
603,595
(721,753)
(48,990)
–
(522)
(154)
203,090 123,058 9,221,820
478,891
12,598
(102,512)
(13,860)
–
–
(60,548)
(2,591)
(6,021)
(36)
16,803
(1,896)
13,041
(7,416)
(1,242)
2,546,285
405,430 6,224,902
222,380 119,169 9,531,630
848,803
92,034
(1,102)
(4,660)
–
(685)
934,390
93,397
(2,119)
(1,432)
–
(780)
– 3,739,750
357,434
–
(253,121)
–
(51,910)
–
3,920
–
(269)
–
– 3,795,804
394,171
–
(78,917)
–
(48,366)
–
7,227
–
(277)
–
151,710
19,913
(3,218)
(8,719)
–
(651)
69,418 4,810,194
478,320*
(261,499)
(66,154)
3,920
(1,721)
8,939
(4,058)
(865)
–
(90)
159,035
19,579
(1,688)
(7,280)
–
(716)
73,344 4,963,060
519,518*
12,371
(94,833)
(12,109)
(59,414)
(2,336)
7,227
–
(1,837)
(34)
1,023,456
– 4,069,642
168,930
71,236 5,333,721
13,605
13,007
2,057
1,514,989
1,522,829
700,716 1,935,681
44,055
49,714 4,258,760
405,430 2,155,260
53,450
47,933 4,197,909
240,870
64,128
340,904
8,454
7,582
663,995
Cost
At January 1, 2020
Additions
Disposals
Transfers
Write-off
Translation difference
At December 31, 2020 and
January 1, 2021
Additions
Disposals
Transfers
Write-off
Translation difference
At December 31, 2021
Accumulated
depreciation and
impairment
At January 1, 2020
Charge for the year
Disposals
Write-off
Impairment loss
Translation difference
At December 31, 2020 and
January 1, 2021
Charge for the year
Disposals
Write-off
Impairment loss
Translation difference
At December 31, 2021
Net book value
At December 31, 2020
At December 31, 2021
US$’000
*
In 2021, RMB 26.1 million (US$ 4.1 million) (2020: RMB 28.2 million) were capitalized as development costs.
In 2021, RMB 0.6 million (US$ 0.1 million) (2020: RMB Nil) were capitalized as capitalized contract cost.
An impairment loss of RMB 7.2 million (US$ 1.1 million) (2020: RMB 3.9 million; 2019: RMB 4.0 million) was
charged to the consolidated statement of profit or loss under “Cost of sales” for the Group’s plant and equipment
within the Yuchai segment. The impairment loss was due to assets that were not in use.
ANNUAL REPORT 2021 89
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
11.
INVESTMENT PROPERTY
Cost
At January 1
Translation difference
At December 31
Accumulated depreciation
At January 1
Charge for the year
Translation difference
At December 31
Net carrying amount
Fair value
Consolidated statements of profit or loss:
Rental income from an investment property
Direct operating expenses (including repairs, maintenance and
depreciation expense) arising from the rental generating property
31.12.2020
RMB’000
31.12.2021
RMB’000
31.12.2021
US$’000
34,940
(1,753)
33,187
28,388
376
(1,406)
27,358
5,829
11,954
230
(180)
33,187
(1,377)
31,810
27,358
355
(989)
26,724
5,086
11,308
77
(82)
5,249
(218)
5,031
4,327
56
(156)
4,227
804
1,789
12
(13)
The Group has no restrictions on the realizable of its investment property and no contractual obligations to
purchase, construct or develop investment property or for repairs, maintenance or enhancement.
The fair value is determined by independent professional qualified assessor. The fair value of investment property
is determined by the market comparison and cost methods. In valuing the investment property, due consideration
is given to factors such as location and size of building, building infrastructure, market knowledge and historical
comparable transactions to arrive at their opinion of value.
The following table shows information about fair value measurement of the investment property using significant
unobservable inputs (Level 3):
Valuation techniques
Unobservable input
2021
Market comparison and
cost method
2020
Market comparison and
cost method
Comparable price:
- RMB 165 to RMB 401
(US$ 26 to US$ 63) per square foot
Comparable price:
- RMB 172 to RMB 418
(US$ 27 to US$ 65) per square foot
Inter-relationship between key
unobservable inputs and fair
value measurement
The estimated fair value increases
with higher comparable price
The estimated fair value increases
with higher comparable price
90 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
12.
INTANGIBLE ASSETS
Goodwill
RMB’000
Technology
Know-how
RMB’000
Cost
At January 1, 2020
Addition
At December 31, 2020 and January 1, 2021
Addition
Transfer
At December 31, 2021
Accumulated amortization and
impairment
At January 1, 2020
Amortization
At December 31, 2020 and January 1, 2021
Amortization
At December 31, 2021
Net carrying amount
At December 31, 2020
At December 31, 2021
US$’000
Goodwill
218,311
–
218,311
–
–
218,311
5,675
–
5,675
–
5,675
212,636
212,636
33,633
Development
costs Trademarks
Total
RMB’000 RMB’000
RMB’000
562,587
530,836
1,093,423
313,571
(414,704)
169,811 1,087,531
530,836
–
169,811 1,618,367
313,571
–
–
–
992,290
169,811 1,931,938
–
–
–
–
–
–
–
–
–
–
133,387
1,012
134,399
38,957
173,356
136,822
–
136,822
–
414,704
551,526
127,712
1,012
128,724
38,957
167,681
8,098
1,093,423
169,811 1,483,968
383,845
60,714
992,290
156,953
169,811 1,758,582
26,860
278,160
Goodwill represents the excess of purchase consideration over fair value of net assets of businesses acquired.
Goodwill acquired through business combinations have been allocated to two cash-generating units for impairment
testing as follows:
•
•
Yuchai
Yulin Hotel. Goodwill allocated to Yulin Hotel was fully impaired in 2008.
Carrying amount of goodwill allocated to the cash-generating unit:
Yuchai
31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
212,636
212,636
33,633
ANNUAL REPORT 2021 91
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
12.
INTANGIBLE ASSETS (cont’d)
Goodwill (cont’d)
Yuchai unit
The Group performs its impairment test annually. The recoverable amount of the unit was determined based on a
value in use calculation using cash flow projections from financial budgets approved by senior management
covering a ten-year period. The business of Yuchai is stable since the Group has control in 1994 and the business
model of Yuchai is unlikely to change in the foreseeable future. The pre-tax discount rate applied to the cash flow
projections was 12.54% (2020: 12.37%) and cash flows beyond the ten-year period are extrapolated using a 5%
growth rate (2020: 6%) that is the same as the long-term average growth rate for PRC. No impairment was
identified for this unit.
Key assumptions used for value in use calculations
Key assumptions used in estimation of value in use were as follows:
•
•
•
Profit from operation
Discount rate
Growth rate used to extrapolate cash flows beyond the forecast period
Profit from operation – Profit from operation is based on management’s estimate with reference to historical
performance and future business outlook of Yuchai unit.
Discount rate – Discount rate reflects management’s estimate of the risks specific to the cash-generating unit and
is estimated based on weighted average cost of capital (“WACC”). The WACC takes into account both debt and
equity. The cost of equity is derived from the expected return on investment by the Group’s investors. The cost of
debt is based on the interest-bearing borrowings the cash-generating unit is obliged to service. This rate is
weighted according to the optimal debt/equity structure arrived on the basis of the capitalization structure of the
peer group.
Growth rate estimate – Growth rate is based on management’s estimate with reference to general available
indication of long-term gross domestic product growth rate of China. The long-term rates used to extrapolate the
budget for Yuchai are 5% and 6.0% for 2021 and 2020 respectively.
Sensitivity to changes in assumptions
The implications of the key assumptions for the recoverable amount are discussed below:
Profit from operation – A decreased demand can lead to a decline in profit from operation. A decrease in demand
by 15.21% (2020: 13.99%) would result in impairment.
Discount rate – A rise in pre-tax discount rate to 14.03% (2020: 13.58%) in the Yuchai unit would result in
impairment.
92 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
12.
INTANGIBLE ASSETS (cont’d)
Goodwill (cont’d)
Sensitivity to changes in assumptions (cont’d)
Growth rate assumptions – Management recognizes that the speed of technological change and the possibility of
new entrants can have a significant impact on growth rate assumptions. A reduction to 1.53% (2020: 3.60%) in the
long-term growth rate in Yuchai unit would result in impairment.
With regard to the assessment of value in use of the Yuchai unit, management believes that no reasonably
possible change in any of the above key assumptions would cause the recoverable amount to materially fall below
the carrying value of the unit.
Technology know-how
At December 31, 2020, The Group has an intangible asset representing technology development costs with
carrying amount of RMB 8.1 million, which is the technology know-how that relates to production of 4Y20 engines.
As of December 31, 2020,
loss charged on this Technology Know-how was
RMB 126.7 million.
the accumulated impairment
In late 2018, the Group had commenced the production of 4Y20 engines. In 2019, 2020 and 2021, management
believed that there was no indicator for further impairment, and also considered there was no significant changes
to the market and economic environment which will have a favourable effect to the recoverable amount of the
intangible asset. Management concluded that no reversal of impairment was necessary in 2019, 2020 and 2021.
In 2021, the development of certain engine platform relating to National VI engines were completed, and the
related development costs amounting to RMB 414.7 million (US$ 65.6 million) were transferred from development
costs to Technology Know-how, and amortization were charged accordingly based on the Group’s policy.
Development costs
During 2020 and 2021, the Group has capitalized development costs of RMB 530.8 million and RMB 313.6 million
(US$ 49.6 million), respectively, for new engines that comply with National VI and Tier 4 emission standards. As of
December 31, 2021, the total capitalized development costs are RMB 992.3 million (US$ 157.0 million). These
development costs relate to on-going development efforts and, accordingly, have not yet been available for use,
and therefore no amortization charges were recorded.
In 2020 and 2021, the Group performs an impairment test on the development costs that are not available for use.
No impairment has been identified. The recoverable amount was determined based on its value in use using the
discounted cash flow approach. Cash flows were projected based on historical growth, past experience and
management best estimation of future business outlook. Both the 2020 and 2021, the Group used 8 years forecast
and were based on the updated financial budgets approved by the senior management with no terminal value.
ANNUAL REPORT 2021 93
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
12.
INTANGIBLE ASSETS (cont’d)
Development costs (cont’d)
Key assumptions used in estimation of value in use were as follows:
•
•
Profit from operation – Profit from operation is based on management’s estimate with reference to historical
revenue generated, growth rate and estimation of future business outlook. In 2021, the Group used a 8 years
business plan, the revenue growth rate is estimated at an average around 12% year-on-year from 2022 to
2025 due to the implementation of new emission standard and government encouragement of consumption
of new energy products, decrease to 5% in 2026 and thereafter management assumed no revenue growth
from 2026 to 2029. In 2020, the business plan projected 8 years, the revenue growth rate is estimated at
around 10% year-on-year from 2021 to 2023 and decrease to 5% in 2024 and 2025. Management assumed
no revenue growth from 2026 to 2028 after reaching the commercial deployment of technology.
Discount rate – Discount rate reflects management’s estimate of the risks specific to the cash-generating unit
and is estimated based on weighted average cost of capital (“WACC”). The WACC takes into account both
debt and equity. The cost of equity is derived from the expected return on investment by the Group’s
investors. The cost of debt is based on the interest-bearing borrowings the cash-generating unit is obliged to
service. This rate is weighted according to the optimal debt/equity structure arrived on the basis of the
capitalization structure of the peer group. The Group has applied a pre-tax discount rate of 12.54% (2020:
12.37%).
Sensitivity to changes in assumptions
The implications of the key assumptions for the recoverable amount are discussed below:
Profit from operation – A decreased demand can lead to a decline in profit from operation. A decrease in demand
by 13.86% (2020: 25.94%) would result in impairment.
Discount rate – A rise in pre-tax discount rate to 15.69% (2020: 20.05%) would result in impairment.
With regard to the assessment of value in use, management believes that no reasonably possible change in any of
the above key assumptions would cause the recoverable amount to materially fall below the carrying value.
Trademarks
In 2019, Yuchai entered into a trademark license agreement with GY Group under which Yuchai was granted the
exclusive and perpetual use of the trademarks listed in the trademark license agreement for a one-time usage fee
of RMB 169.8 million.
Management has assessed and concluded that the right granted by the trademark license, according to the terms
and conditions of the trademark license agreement, is indefinite.
In 2020 and 2021, the Group performed an annual impairment review by taking Yuchai as a cash–generating unit.
Using the same cash flow projection and assumptions for goodwill impairment test disclosed above, management
concluded that no impairment charge is to be recognized in 2020 and 2021.
94 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
13.
INVENTORIES
Raw materials
Work in progress
Finished goods
31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
1,940,119
33,211
2,497,865
2,111,881
25,169
3,071,586
334,042
3,981
485,841
823,864
Total inventories at the lower of cost and net realizable value
4,471,195
5,208,636
31.12.2019 31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
RMB’000
Inventories recognized as an expense in cost of sales
Inclusive of the following charge/(credit):
- Inventories written down
- Reversal of write-down of inventories
- Inventories written off
13,167,181 15,501,807 16,457,476
2,603,125
31,810
(14,788)
–
82,386
(54,408)
–
32,813
(41,823)
10,085
5,190
(6,615)
1,595
The reversal of write-down of inventory was made when the related inventories were sold above their carrying
value.
14. OTHER CURRENT ASSETS
Current
Development properties
Quoted equity securities (i)
31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
16,906
6,258
23,164
16,167
606
16,773
2,557
96
2,653
Note:
(i)
The quoted equity securities are listed on the Singapore Exchange. In 2021, the Group has disposed some of
the quoted equity securities for consideration of RMB 6.5 million (US$ 1.0 million) (2020: RMB 1.4 million)
and recognized a gain on disposal of RMB 5.4 million (US$ 0.9 million) (2020: RMB 0.9 million) in
consolidated statement of profit or loss under “Other operating income”.
ANNUAL REPORT 2021 95
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
15. TRADE AND OTHER RECEIVABLES
Trade receivables, gross
Less: Allowance for expected credit losses
Net trade receivables (Note 6.2)
Bills receivable (i)
Total (Note 34)
Amounts receivable:
- associates and joint ventures (trade)
- associates and joint ventures (non-trade)
- related parties (trade)
- related parties (non-trade)
Bills receivable in transit
Interest receivables
Staff advances
Others
Less: Impairment losses – other receivables (ii)
Other receivables carried at amortized cost (Note 34)
Tax recoverable
Prepayments
Right of return assets
Net other receivables
Total trade and other receivables
31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
332,567
(43,519)
557,767
(33,210)
88,224
(5,253)
289,048
7,793,343
524,557
6,437,100
82,971
1,018,174
8,082,391
6,961,657
1,101,145
1,266
11,119
9,663
2,992
12,620
4,999
3,326
36,951
(6,741)
76,195
236,400
64,102
–
376,697
243
11,959
70,594
459
22,360
11,788
5,578
24,085
(6,231)
140,835
328,369
66,474
40,761
576,439
38
1,892
11,166
73
3,537
1,865
882
3,810
(986)
22,277
51,939
10,514
6,447
91,177
8,459,088
7,538,096
1,192,322
Note:
(i)
(ii)
As of December 31, 2021, bills receivable includes bills received from joint ventures and related parties
amounted to RMB 0.7 million (US$ 0.1 million) (2020: RMB Nil) and RMB 523.5 million (US$ 82.8 million)
(2020: RMB 1,014.1 million) respectively.
As of December 31, 2020 and 2021, bills receivable amounted to RMB 13.4 million (US$ 2.1 million) (2020:
RMB Nil) was pledged to secure bank facilities.
This comprised impairment loss on bills receivable in transit of RMB 6.0 million (US$ 0.9 million) as of
December 31, 2021 (2020: RMB 6.5 million). This impairment
loss was charged to the consolidated
statement of profit or loss under “Selling, general and administrative expenses”.
Trade receivables are non-interest bearing and are generally on 60-90 days’ term. They are recognized at their
original invoice amounts which represent their fair values on initial recognition.
Non-trade balance from associates, joint ventures and other related parties are unsecured, interest-free, and
repayable on demand.
96 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
15. TRADE AND OTHER RECEIVABLES (cont’d)
Movement in the allowance for expected credit losses of trade and other receivables is as follows:
At January 1
Credit to consolidated statement of profit or loss (under “Selling, general
and administrative expenses”)
Written off
Translation difference
At December 31
31.12.2020
RMB’000
31.12.2021
RMB’000
31.12.2021
US$’000
62,854
50,260
7,950
(12,349)
(242)
(3)
(8,525)
(2,278)
(16)
50,260
39,441
(1,348)
(360)
(3)
6,239
As of December 31, 2020 and 2021, outstanding bills receivable discounted with banks for which the Group
retained a recourse obligation totaled RMB 2,225.1 million and RMB 79.1 million (US$ 12.5 million) respectively. All
bills receivable discounted have contractual maturities within 12 months at time of discounting.
As of December 31, 2020 and 2021, outstanding bills receivable endorsed to suppliers with recourse obligation
were RMB 1,834.5 million and RMB 2,550.0 million (US$ 403.3 million) respectively.
As of December 31, 2020 and 2021, trade receivables due from a major customer group, Dongfeng Automobile
Co., Ltd. and its affiliates (the “Dongfeng companies”) were RMB 17.6 million and RMB 65.7 million (US$ 10.4
million), respectively. See Note 31 for further discussion of customer concentration risk.
For terms and conditions relating to related parties, refer to Note 28.
16. CASH AND CASH EQUIVALENTS
LONG-TERM BANK DEPOSITS
SHORT-TERM BANK DEPOSITS
RESTRICTED CASH
Non-current
Long-term bank deposits (i)
Current
Cash and cash equivalents
Short-term bank deposits (ii)
Restricted cash
Cash and bank balances
31.12.2020
RMB’000
31.12.2021
RMB’000
31.12.2021
US$’000
140,000
110,000
17,399
5,877,647
258,756
171,135
4,788,219
357,335
76,001
6,307,538
5,221,555
6,447,538
5,331,555
757,366
56,521
12,021
825,908
843,307
ANNUAL REPORT 2021 97
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
16. CASH AND CASH EQUIVALENTS (cont’d)
LONG-TERM BANK DEPOSITS (cont’d)
SHORT-TERM BANK DEPOSITS (cont’d)
RESTRICTED CASH (cont’d)
Note:
(i)
(ii)
In 2021, YMMC has placed new three-year time deposits of RMB 20.0 million (US$ 3.2 million) (2020:
RMB 90.0 million) at annual interest rate of 3.85% (2020: range from 3.85% to 3.99%) with certain banks.
These long-term deposits are not considered to be cash equivalents.
As at December 31, 2021, the three-year time deposits placed in 2019 has remaining maturity period of less
than 12 months. Accordingly, this has been classified as short-term bank deposits in 2021.
Short-term bank deposits relate to bank deposits with initial maturities of more than three months and subject
to more than insignificant risk of changes in value upon withdrawal before maturity. The interest rate of these
bank deposits as of December 31, 2021 for the Group ranged from 0.30% to 1.65% (2020: 0.23% to 2.25%).
These short-term bank deposits are not considered as cash equivalents.
Cash at banks earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for
varying periods, depending on the immediate cash requirements of the Group, and earn interests at the respective
short-term deposit rates. The interest rate of the bank deposits (excluding long-term and short-term bank deposits)
as of December 31, 2021 for the Group ranged from 0.13% to 1.55% (2020: 0.10% to 1.55%).
As at December 31, 2021, there is fixed deposits of RMB 140.3 million (US$ 22.2 million) held with a related party
(2020: RMB 130.8 million).
As of December 31, 2021, the Group’s restricted cash of RMB 76.0 million (US$ 12.0 million) (2020: RMB 171.1
million) was used as collateral by the banks for the issuance of bills to suppliers.
As of December 31, 2020 and 2021, the Group had RMB 491.9 million and RMB 474.2 million (US$ 75.0 million)
respectively, of undrawn borrowing facilities in respect of which all conditions precedent had been met. The
commitment fees incurred for 2019, 2020 and 2021 were RMB 0.2 million, less than RMB 0.1 million and RMB Nil
(US$ Nil) respectively.
For the purpose of the statement of cash flows, cash and cash equivalents comprise the following at December 31:
Cash at banks and on hand
Short-term bank deposits (i)
Cash and cash equivalents
31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
667,194
4,218,131
90,172
570,088
RMB’000
5,466,288
411,359
5,877,647
4,788,219
757,366
Note:
(i)
This relates to other short-term, highly liquid investments with original maturities of three months or less that
are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in
value.
98 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
17. LEASES
Group as a lessee
The Group has lease contracts for land, motor vehicles, office space and staff accommodations used in its
operations. These leases are generally with lease term of between 1 and 6 years. The Group’s obligations under
its leases are secured by the lessor’s title to the leased assets.
The Group also has certain leases of office space and staff accommodations with lease terms of 12 months or
less. The Group has applied the “short-term leases” recognition exemptions for these leases.
Set out below are the carrying amounts of right-of-use assets recognized and the movements during the year.
At January 1, 2020
Addition
Depreciation expenses
Disposal
Translation difference
At December 31, 2020 and January 1, 2021
Addition
Depreciation expenses
Disposal
Translation difference
At December 31, 2021
Leasehold
land
RMB’000
Building
and
office space
RMB’000
Office
furniture,
fittings and
equipment
RMB’000
Total
RMB’000
Total
US$’000
353,807
2,058
(14,102)
(3,198)
–
338,565
1,355
(13,655)
(21,620)
–
304,645
61,556
13,198
(29,182)
–
(142)
45,430
22,558
(27,790)
–
(80)
40,118
21
–
(14)
–
(1)
6
58
(13)
–
–
415,384
15,256
(43,298)
(3,198)
(143)
384,001
23,971
(41,458)
(21,620)
(80)
65,702
2,413
(6,848)
(506)
(22)
60,739
3,792
(6,558)
(3,420)
(13)
51
344,814
54,540
Set out below are the carrying amounts of lease liabilities and the movements during the year:
2020
2021
RMB’000 RMB’000 US$’000
2021
At January 1
Additions
Accretion of interest (Note 7.3)
Payments
Translation difference
At December 31
Current (Note 25)
Non-current (Note 25)
Total
The maturity analysis of lease liabilities is disclosed in Note 25.
60,007
15,256
2,198
(37,561)
(122)
39,778
22,755
17,023
39,778
39,778
23,971
1,819
(24,940)
(97)
40,531
27,125
13,406
40,531
6,291
3,792
288
(3,945)
(16)
6,410
4,290
2,120
6,410
ANNUAL REPORT 2021 99
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
17. LEASES (cont’d)
Group as a lessee (cont’d)
The following are the amounts recognized in profit of loss:
Depreciation charge for right-of-use assets
Interest expenses on lease liabilities (Note 7.3)
Expenses relating to short-term leases (included in selling, general and
administrative expenses and research and development expenses)
Total amount recognized in profit or loss
2020
RMB’000
2021
RMB’000
2021
US$’000
43,127
2,198
14,313
59,638
41,458
1,819
6,558
288
27,686
4,379
70,963
11,225
In 2021, the Group had total cash outflows for leases of RMB 52.6 million (US$ 8.3 million) (2020: RMB 51.9
million). The Group also had non-cash additions to right-of-use assets and lease liabilities of RMB 24.0 million
(US$ 3.8 million) in 2021 (2020: RMB 15.3 million). The future cash outflows relating to leases that have not yet
commenced are disclosed in Note 29.
Group as a lessor
The Group has entered into operating leases on some of its assets, including surplus offices and warehouses.
Theses leases have terms between 1 to 15 years. Rental income recognized by the Group during the year is
RMB 15.2 million (US$ 2.4 million) (2020: RMB 13.3 million).
Future minimum rental receivables under non-cancellable operating leases as of 31 December are as follows:
Within 1 year
- related parties
- joint venture
- third parties
After 1 year but within 5 years
- related parties
- joint venture
- third parties
More than 5 years
- joint venture
- third parties
31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
902
2,590
5,058
–
10,720
13,305
14,141
4,392
51,108
598
1,425
5,573
2,358
5,698
7,240
10,566
4,272
37,730
95
225
882
373
901
1,145
1,671
676
5,968
100 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
18.
ISSUED CAPITAL
Issued capital
Authorized shares
Ordinary share of par value US$ 0.10 each
Ordinary shares issued and fully paid
At January 1, 2020, December 31, 2020 and December 31, 2021
US$’000
Special share issued and fully paid
One special share issued and fully paid at US$ 0.10 per share
*
Less than RMB 1 (US$ 1)
31.12.2020
31.12.2021
thousands thousands
100,000
100,000
Number of
shares
RMB’000
40,858,290
2,081,138
329,179
31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
*
*
*
The holders of ordinary shares are entitled to such dividends as the Board of Directors of the Company may
declare from time to time. All ordinary shares are entitled to one vote on a show of hands and carry one vote per
share on a poll.
The holder of special share is entitled to elect a majority of directors of the Company. In addition, no shareholders’
resolution may be passed without the affirmative vote of the special share, including any resolution to amend the
Memorandum of Association or Bye-laws of the Company. The special share is not transferable except to Hong
Leong Asia Ltd. (“HLA”), Hong Leong (China) Limited (“HLC”) or any of its affiliates. The Bye-Laws of the Company
provides that the special share shall cease to carry any rights in the event that HLA and its affiliates cease to own,
directly or indirectly, at least 7,290,000 ordinary shares in the capital of the Company.
19. DIVIDENDS DECLARED AND PAID
Declared and paid during the year
Dividends on ordinary shares:
Final dividend paid in 2021: US$ 1.70 per share (2020: US$ 0.85 per
share)
Dividend paid in cash
31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
245,871
245,871
448,712
448,712
70,974
70,974
ANNUAL REPORT 2021 101
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
20. RESERVES
Statutory reserve
Statutory general reserve (i)
At January 1
Transfer from retained earnings
At December 31
General surplus reserve (ii)
At January 1 and December 31
Total
Capital reserves (iii)
At January 1 and December 31
31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
278,601
2,858
281,459
281,459
2,072
283,531
25,706
25,706
307,165
309,237
44,519
328
44,847
4,066
48,913
30,704
30,704
4,857
Note:
(i)
(ii)
(iii)
In accordance with the relevant regulations in the PRC, a 10% appropriation to the statutory general reserve
based on the net income reported in the PRC financial statements is required until the balance reaches 50%
of the authorized share capital of Yuchai and its subsidiaries. Statutory general reserve can be used to make
good previous years’ losses, if any, and may be converted into share capital by the issue of new shares to
shareholders in proportion to their existing shareholdings, or by increasing the par value of the shares
currently held by them, provided that the reserve balance after such issue is not less than 25% of the
authorized share capital.
General surplus reserve is appropriated in accordance with Yuchai’s Articles and resolution of the board of
directors. General surplus reserve may be used to offset accumulated losses or increase the registered
capital.
Capital reserves pertain to a capital transaction in 2015.
31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
(89,925)
19,758
(11,472)
(79,720)
(118,176)
19,758
(11,472)
(30,902)
(18,692)
3,125
(1,814)
(4,888)
(161,359)
(140,792)
(22,269)
Other components of equity
Foreign currency translation reserve (i)
Performance shares reserve (ii)
Premium paid for acquisition of non-controlling interests
Fair value reserve of financial assets at FVOCI (iii)
Total
Note:
(i)
(ii)
(iii)
Foreign currency translation reserve represents exchange differences arising from the translation of the
financial statements of foreign operations whose functional currencies are different from that of the Group’s
presentation currency.
Performance shares reserve comprises the cumulative value of employee services received in return for
share-based compensation. The amount in the reserve is retained when the option is expired.
Fair value reserve of financial assets at FVOCI relates to the subsequent measurement of the Group’s bills
receivable at fair value through OCI.
102 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
21. SHARE-BASED PAYMENT
The Company’s Equity Incentive Plan (“Equity Plan”) was approved by the shareholders at the Annual General
Meeting of the Company held on July 4, 2014 for duration of 10 years (from July 29, 2014 to July 28, 2024).
All options granted under the Equity Plan are subject to a vesting schedule as follows:
(1)
one year after the date of grant for up to 33% of the shares over which the options are exercisable;
(2)
(3)
two years after the date of grant for up to 66% (including (1) above) of the shares over which the options are
exercisable; and
three years after the date of grant for up to 100% (including (1) and (2) above) of the shares over which the
options are exercisable.
In 2021, there was no expense arising from equity-settled share-based payment transactions. (2019: Nil; 2020:
Nil).
Movements during the year
The following table illustrates the number and weighted average exercise prices (“WAEP”) of, and movements in
share options during the year:
Outstanding at January 1
Cancelled during the year
Outstanding at December 31
Exercisable at December 31
Number of
share options
WAEP
31.12.2020 31.12.2020
Number of
share options
31.12.2021
WAEP
31.12.2021
470,000 US$ 21.11
–
–
470,000
US$ 21.11
(200,000) US$ 21.11
470,000 US$ 21.11
270,000
US$ 21.11
470,000 US$ 21.11
270,000
US$ 21.11
The fair value of services received in return for share options granted are measured by reference to the fair value
of share options granted. The estimate of the fair value of the services received is measured based on the Black-
Scholes model. The expected life used in the model has been adjusted, based on management’s best estimate, for
the effects of non-transferability, exercise restrictions and behavioral considerations.
Fair value of share options and assumptions
Date of grant of options
Fair value at measurement date (US$)
Share price (US$)
Exercise price (US$)
Expected volatility (%)
Expected option life (years)
Expected dividends (%)
Risk-free interest rate (%)
On July 29,
2014
5.70 – 6.74
21.11
21.11
47.4
3.5 – 5.5
5.81
1.4 – 2.0
ANNUAL REPORT 2021 103
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
21. SHARE-BASED PAYMENT (cont’d)
Fair value of share options and assumptions (cont’d)
The exercise price for options outstanding as of December 31, 2021 was US$ 21.11 dollar (2020: US$ 21.11
dollar).
The weighted average remaining contractual life for the share options outstanding as of December 31, 2021 was
2.6 (2020: 3.6) years.
The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the
options is indicative of future trends, which may not necessarily be the actual outcome.
There are no market conditions associated with the share options granted. Service conditions and non-market
performance conditions are not taken into account in the measurement of the fair value of the service to be
received at the grant date.
22. TRADE AND OTHER PAYABLES
Current
Trade payables
Bills payables (i)
Other payables
Accrued expenses
Accrued staff costs
Refund liabilities
Dividend payable
Amount due to:
- associates and joint ventures (trade)
- associates and joint ventures (non-trade)
- related parties (trade)
- related parties (non-trade)
Financial liabilities carried at amortized cost (Note 31, Note 34)
Deferred grants (Note 27)
Advance from customers
Other tax payable
31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
3,406,398
3,348,163
533,705
233,053
714,701
1,031,562
49,468
467,351
205
238,622
1,841
10,025,069
23,468
320
62,111
3,884,812
3,085,206
423,787
167,575
689,327
913,756
29,304
176,819
27
214,980
1,308
9,586,901
12,482
316
39,416
614,472
487,996
67,032
26,506
109,033
144,531
4,635
27,968
4
34,004
207
1,516,388
1,974
50
6,234
Total trade and other payables (current)
10,110,968
9,639,115
1,524,646
(i)
As of December 31, 2021, the bills payables include bills payable to joint ventures, associates and other
related parties amounted to RMB 28.4 million (US$ 4.5 million) (2020: RMB 105.6 million), RMB 5.4 million
(US$ 0.9 million) (2020: RMB 12.9 million) and RMB 237.6 million (US$ 37.6 million) (2020: RMB 249.0
million) respectively.
104 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
22. TRADE AND OTHER PAYABLES (cont’d)
Non-current
Other payables (i) (Note 31, Note 34)
31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
191,563
188,725
29,851
(i)
This relates to accrual for bonus that is not expected to be settled within next 12 months.
Terms and conditions of the above financial liabilities:
•
•
•
Trade payables are non-interest bearing and are normally settled on 60 - 90 day terms.
Other payables (current) are non-interest bearing and have an average term of three months.
For terms and conditions relating to related parties, refer to Note 28.
23. PROVISION
At January 1, 2020
Provision made
Provision utilized
Provision reversed
At December 31, 2020 and January 1, 2021
Provision made
Provision utilized
Provision reversed
At December 31, 2021
24. CONTRACT LIABILITIES
Unfulfilled service-type maintenance services
Advance from customer
Total
Current
Non-current
Total contract liabilities (Note 6.2)
Provision for
warranty
RMB’000
Provision for
onerous
Total
contract
RMB’000 RMB’000 US$’000
Total
215,715
335,664
(295,940)
–
255,439
292,157
(299,397)
–
248,199
2,316
13,639
–
(2,316)
13,639
4,829
–
(13,639)
218,031
349,303
(295,940)
(2,316)
269,078
296,986
(299,397)
(13,639)
34,487
55,250
(46,810)
(366)
42,561
46,975
(47,357)
(2,157)
4,829
253,028
40,022
31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
179,723
755,739
935,462
868,193
67,269
935,462
209,773
432,659
642,432
573,259
69,173
642,432
33,180
68,435
101,615
90,674
10,941
101,615
ANNUAL REPORT 2021 105
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
25. LEASE LIABILITIES
Effective
interest rate
%
Maturity
31.12.2020
RMB’000
31.12.2021 31.12.2021
US$’000
RMB’000
Current (Note 17)
Non- current (Note 17)
1.25% - 6.20%
2021
1.25% - 6.20% 2022-2026
22,755
17,023
27,125
13,406
4,290
2,120
26. LOANS AND BORROWINGS
Current
Renminbi denominated loans
Non-current
Renminbi denominated loans
Current
Renminbi denominated loans
Non-current
Renminbi denominated loans
Effective
interest rate
%
Maturity
31.12.2020
RMB’000
1.80 – 4.05
2021
1,730,000
3.30
2022
500,000
Effective
interest rate
%
Maturity
31.12.2021
RMB’000
31.12.2021
US$’000
1.10 – 3.85
2022
2,103,000
332,637
3.45
2023
100,000
15,817
Note:
(i)
All loan balances as stated above do not have a callable feature.
S$ 30.0 million credit facility with DBS Bank Ltd (“DBS”)
On June 25, 2021, the Company entered into an uncommitted revolving credit facility agreement with DBS with an
aggregate value of S$ 30.0 million to refinance the S$ 30.0 million facility that matured on June 1, 2021. Among
other things, the terms of the facility required that (i) HLA retains ownership of the special share, at all-time retains
at least 35% ownership of the Company and that the Company remain a consolidated subsidiary of HLA, (ii) the
Company at all-time retains at least 76.4% ownership in Yuchai and (iii) HLGE remains listed on the Main Board of
Singapore Exchange. The terms of the facility also included certain financial covenants with respect to the
Company’s consolidated tangible net worth (as defined in the agreement) not being less than US$ 400 million, and
the ratio of the consolidated total debt (as defined in the agreement) to consolidated tangible net worth not
exceeding 1.0 times. This arrangement was used to finance the Group general working capital requirements.
106 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
26. LOANS AND BORROWINGS (cont’d)
S$ 30.0 million credit facility with MUFG Bank Ltd, Singapore Branch (formally known as Bank
of Tokyo Mitsubishi UFJ, Ltd., Singapore Branch) (“MUFG”)
On June 10, 2020, the Company entered into an uncommitted and unsecured multi-currency revolving credit facility
agreement with MUFG for an aggregate value of S$ 30.0 million to refinance the S$ 30.0 million facility that
matured on March 17, 2020. The facility is available for three years from the date of the facility agreement and will
be used to finance the Company’s general working capital requirements. Among other things, the terms of the
facility require that HLA retains ownership of the Company’s special share and that the Company remains a
subsidiary of HLA. The terms of the facility also include certain financial covenants with respect to the Company’s
tangible net worth (as defined in the agreement) not being less than US$ 120 million at all times and the ratio of the
Company’s total net debt (as defined in the agreement) to tangible net worth not exceeding 2.0 times at all times,
as well as negative pledge provisions and customary drawdown requirements.
US$ 30.0 million credit facility with Sumitomo Mitsui Banking Corporation, Singapore Branch
(“SMBC”)
On June 24, 2020, the Company entered into an uncommitted and unsecured multi-currency short-term revolving
credit facility agreement with SMBC for an aggregate value of US$ 30.0 million to refinance the US$ 30.0 million
facility that matured on March 18, 2020. The maximum tenor of each drawdown under the facility is 6 months and
will be utilized by the Company to finance its general working capital requirements. The terms of the facility require,
among other things, that HLA retains ownership of the special share and that the Company remains a subsidiary of
HLA. The terms of the facility also include certain financial covenants with respect to the Company’s consolidated
tangible net worth (as defined in the agreement) as of June 30 and December 31 of each year not less than
US$ 200 million and the ratio of the Company’s consolidated total net debt (as defined in the agreement) to
consolidated tangible net worth as of June 30 and December 31 of each year not exceeding 2.0 times, as well as
negative pledge provisions and customary drawdown requirements.
27. DEFERRED GRANTS
At January 1
Received during the year
Grant receivable
Grant disbursed to partner of joint project
Released to consolidated statement of profit or loss
At December 31
Current (Note 22)
Non-current
31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
676,728
52,241
129
(48,632)
(138,856)
541,610
23,468
518,142
541,610
541,610
50,582
–
(16,270)
(151,782)
424,140
12,482
411,658
424,140
85,668
8,000
–
(2,573)
(24,008)
67,087
1,974
65,113
67,087
The government grant that have been received in PRC was to support and fund Yuchai’s production facilities,
research and development activities for product
innovations and developments. As at December 31, 2021,
RMB 247.9 million (US$ 32.9 million) (2020: RMB 271.6 million) of the deferred grants are related to assets.
ANNUAL REPORT 2021 107
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
27. DEFERRED GRANTS (cont’d)
The grant receivable is related to the Job Support Scheme (the “JSS”) that was introduced in Singapore in
response to COVID-19 coronavirus pandemic. The JSS is temporary scheme introduced to help the enterprises
retain local employees during the period of economic uncertainty. Under the JSS, employers will receive cash
grants in relation to the gross monthly wages of eligible employees. In 2020 and 2021, JSS grant income
amounted to RMB 1.1 million and RMB 0.3 million (less than US$ 0.1 million) were credited to the consolidated
statement of profit or loss under “Other income”.
28. RELATED PARTY DISCLOSURES
The ultimate parent
As of December 31, 2021, the controlling shareholder of the Company, HLA, indirectly owned 18,270,965, or
44.7% (2020: 18,270,965, or 44.7%), of the ordinary shares in the capital of the Company, as well as a special
share that entitles it to elect a majority of directors of the Company. HLA controls the Company through its wholly-
owned subsidiary, HLC, and through HLT, a wholly-owned subsidiary of HLC. HLT owns approximately 23.3%
(2020: 23.3%) of the ordinary shares in the capital of the Company and is, and has since August 2002 been, the
registered holder of the special share. HLA also owns, through another wholly-owned subsidiary, Well Summit
Investments Limited, approximately 21.4% (2020: 21.4%) of the ordinary shares in the capital of the Company.
HLA is a member of
the Hong Leong Investment Holdings Pte. Ltd., or Hong Leong Investment group of
companies. Prior to August 2002, the Company was controlled by Diesel Machinery (BVI) Limited, which, until its
dissolution, was a holding company controlled by HLC and was the prior owner of the special share. Through
HLT’s stock ownership and the rights accorded to the special share under Bye-Laws of the Company and various
agreements among shareholders, HLA is able to effectively approve and effect most corporate transactions.
There were transactions other than dividends paid, between the Group and HLA of RMB 0.5 million (less than
US$ 0.1 million) (2020: RMB 0.03 million; 2019: RMB 0.03 million) during the financial years ended December 31,
2019, 2020 and 2021 respectively. The transaction relates to consultancy fees charged by HLA.
Entity with significant influence over the Group
As of December 31, 2021, the Yulin City Government through Coomber Investment Ltd. owned 17.2% (2020:
17.2%) of the ordinary shares in the capital of the Company.
108 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
28. RELATED PARTY DISCLOSURES (cont’d)
The following provides the significant transactions that have been entered into with related parties for the relevant
financial year.
31.12.2019 31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
RMB’000
Sales of engines and materials
- associates and joint ventures
- GY Group (including its subsidiaries and affiliates)
Purchase of material, supplies and engines
- associates and joint ventures
- GY Group (including its subsidiaries and affiliates)
Hospitality, restaurant, consultancy and other service
income charged to
- a joint venture
- GY Group (including its subsidiaries and affiliates)
Service charge charged by
- joint ventures
Rental income
- joint ventures
- GY Group (including its subsidiaries and affiliates)
Property management service expenses
- GY Group (including its subsidiaries and affiliates)
Selling, general and administrative expenses
- a joint venture
- GY Group (including its subsidiaries and affiliates)
- HLA (including its affiliates)
Delivery, storage, distribution and handling expenses
- GY Group (including its subsidiaries and affiliates)
Payment for trademarks usage fee
- GY Group
Payment for lease liabilities
- GY Group (including its subsidiaries and affiliates)
Purchases of vehicles and machineries
- GY Group (including its subsidiaries and affiliates)
912,877
1,792,280
1,256,268
2,637,845
393,440
3,223,785
1,999,831
1,895,239
2,792,707
1,245,030
2,036,675
1,307,137
3,984
15,350
3,918
6,765
2,152
6,609
–
–
5,023
3,206
2,133
4,565
3,970
4,415
275
62,232
509,915
322,146
206,754
340
1,045
795
698
43
22,595
24,968
21,978
3,476
–
19,953
6,788
7,287
4,728
6,687
2,530
9,315
7,188
400
1,473
1,137
304,532
312,891
300,699
47,562
169,811
–
–
–
33,594
18,086
17,215
2,723
2,817
2,838
3,460
547
Note:
(i)
The Group has adopted IFRS 16 on January 1, 2019. These leasing expenses have been recognized as
right-of-use assets and lease liabilities on the consolidated statement of financial position as of December 31,
2020 and 2021.
In addition to the above, Yuchai also entered into transactions with other PRC Government owned enterprises.
Management considers that these transactions were entered into in the normal course of business and expects
that these transactions will continue on normal commercial terms.
The transactions with related parties are made at terms agreed between the parties.
ANNUAL REPORT 2021 109
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
28. RELATED PARTY DISCLOSURES (cont’d)
Compensation of key management personnel of the Group
31.12.2019 31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
RMB’000
Short-term employee benefits
Contribution to defined contribution plans
41,606
362
41,968
43,178
292
43,470
25,289
273
25,562
4,000
43
4,043
The non-executive directors do not receive pension entitlements from the Group.
29. COMMITMENTS AND CONTINGENCIES
Operating lease commitments – Group as lessee
The Group has various lease contracts that have not yet commenced as of December 31, 2021. The future lease
payments for these non-cancellable lease contracts are as follows:
Within 1 year
After 1 year but within 5 years
After 5 years
31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
321
1,628
71
2,020
2,769
2,178
–
4,947
438
345
–
783
The Group has entered into certain lease contracts in which the lease of these assets will be commencing in 2022.
The Group has disclosed these as operating lease commitments as at year end.
Capital commitments
As of December 31, 2020 and 2021, the Group had capital expenditure (mainly in respect of property, plant and
equipment) contracted for but not paid and not recognized amounting to RMB 450.0 million and RMB 425.2 million
(US$ 67.3 million) respectively. The Group’s share of joint venture’s capital commitment is disclosed in Note 5.
Investment commitments
As of December 31, 2020 and 2021, the Group has commitment of RMB 17.6 million and RMB Nil (US$ Nil)
relating to the Group’s interest in joint venture, respectively.
Letter of credits
As of December 31, 2020 and 2021, Yuchai had issued irrevocable letter of credits of RMB 54.4 million and
RMB 31.7 million (US$ 5.0 million), respectively.
110 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
29. COMMITMENTS AND CONTINGENCIES (cont’d)
Product liability
The General Principles of the Civil Law of the People’s Republic of China imposes that manufacturers and sellers
are liable for loss and injury caused by defective products. Yuchai and its subsidiaries do not carry product liability
insurance. Yuchai and its subsidiaries have not had any significant product liability claims brought against them.
Environmental liability
China adopted its Environmental Protection Law in 1989, and the State Council and the Ministry of Ecology and
Environment (formerly known as the Ministry of Environmental Protection) promulgate regulations as required from
time to time. The Environmental Protection Law addresses issues relating to environmental quality, waste disposal
and emissions, including air, water and noise emissions. Environmental regulations have not had a material impact
on Yuchai’s results of operations. Yuchai delivers, on a regular basis, burned sand and certain other waste
products to a waste disposal site approved by the local government and makes payments in respect thereof.
Yuchai expects that environmental standards and their enforcement in China will, as in many other countries,
become more stringent over time, especially as technical advances make achievement of higher standards more
feasible. Yuchai has built an air filter system to reduce the level of dust and fumes resulting from its production of
diesel engines.
Yuchai is subject to Chinese national and local environmental protection regulations which currently impose fees
for the discharge of waste substances, require the payment of fines for pollution, and provide for the closure by the
Chinese government of any facility that fails to comply with orders requiring Yuchai to cease or improve upon
certain activities causing environmental damage. Due to the nature of its business, Yuchai produces certain
amounts of waste water, gas, and solid waste materials during the course of its production. Yuchai believes its
environmental protection facilities and systems are adequate for it to comply with the existing national, provincial
and local environmental protection regulations. However, Chinese national, provincial or local authorities may
impose additional or more stringent regulations which would require additional expenditure on environmental
matters or changes in Yuchai’s processes or systems.
30. SEGMENT INFORMATION
For management purposes, the Group is organized into business units based on their products and services, and
has two reportable operating segments as follows:
•
•
Yuchai primarily conducts manufacturing and sale of diesel engines which are mainly distributed in the PRC
market.
HLGE is engaged in hospitality and property development activities conducted mainly in the PRC and
Malaysia. HLGE is listed on the Main Board of the Singapore Exchange.
ANNUAL REPORT 2021 111
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
30. SEGMENT INFORMATION (cont’d)
Management monitors the operating results of its business units separately for the purpose of making decisions
about resource allocation and performance assessment.
Year ended
December 31, 2019
Yuchai
RMB’000 RMB’000
HLGE Corporate
RMB’000
Eliminations/
adjustment
RMB’000
Revenue
Total external revenue (Note 6.1)
Results
Interest income
Interest expense
Impairment of property, plant and
equipment
Staff severance cost
Depreciation and amortization
Share of profit of associates and joint
venture
Income tax expense
Segment profit after tax
Total assets
Total liabilities
Other disclosures
Investment in joint ventures
Capital expenditure
Revenue
Total external revenue (Note 6.1)
Results
Interest income
Interest expense
Impairment of property, plant and
equipment
Staff severance cost
Depreciation and amortization
Share of profit of associates and joint
venture
Income tax expense
Segment profit after tax
Total assets
Total liabilities
Other disclosures
Investment in joint ventures
Capital expenditure
Consolidated
financial
statements
RMB’000
18,016,085
177,261
(126,851)
(3,950)
(15,454)
(465,209)
19,034
(172,619)
860,700
23,854,191
(12,280,806)
Consolidated
financial
statements
RMB’000
20,581,170
166,970
(147,293)
(3,920)
(19,712)
(494,607)
(58,970)
(192,538)
779,326
26,290,958
(14,458,248)
17,980,304
35,781
–
158,855
(126,379)
(3,950)
(15,454)
(458,665)
5,167
(51)
–
–
(5,551)
13,239
(421)
–
–
(993)
18,137
(141,330)
884,562
22,817,479
(12,127,021)
897
(527)
4,457
416,397
(15,575)
–
(41)
1,939
2,120,767
(31,278)
–
–
–
–
–
–
–
(30,721)(1)
(30,258)(1)
(1,500,452)
(106,932)(2)
271,274
917,192
2,717
1,033
–
55
–
–
273,991
918,280
20,557,660
23,510
–
158,569
(147,161)
(3,920)
(19,712)
(488,536)
3,538
(35)
–
–
(5,181)
4,863
(97)
–
–
(890)
(59,476)
(156,007)
829,042
25,330,625
(14,328,688)
506
(200)
1,052
392,096
(10,346)
–
(69)
(17,127)
2,075,262
(15,797)
–
–
–
–
–
–
–
(36,262)(1)
(33,641)(1)
(1,507,025)
(103,417)(2)
223,918
550,424
3,202
4,409
–
14
–
–
227,120
554,847
Year ended
December 31, 2020
Yuchai
RMB’000 RMB’000
HLGE Corporate
RMB’000
Eliminations/
adjustment
RMB’000
112 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
30. SEGMENT INFORMATION (cont’d)
Year ended
December 31, 2021
Revenue
Total external revenue
(Note 6.1)
Results
Interest income
Interest expense
Impairment of property,
plant and equipment
Staff severance cost
Depreciation and
amortization
Share of profit of associates
and joint venture
Income tax expense
Segment profit after tax
Total assets
Total liabilities
Other disclosures
Investment in joint ventures
Capital expenditure
Yuchai
HLGE Corporate
RMB’000 RMB’000 RMB’000
Eliminations/
adjustment
RMB’000
Consolidated
financial
statements
RMB’000
Consolidated
financial
statements
US$’000
21,254,134
11,796
–
129,520
(111,747)
1,363
(19)
1,200
(26)
(7,227)
(11,771)
–
–
–
–
(567,465)
(5,221)
(910)
(96,658)
(29,043)
443,499
24,092,883
(13,402,330)
763
(245)
(6,728)
368,415
(10,322)
–
–
(20,321)
2,146,060
(13,550)
–
–
–
–
–
–
–
(14,528)(1)
(8,556)(1)
(1,506,672)
(59,140)(2)
21,265,930
3,363,691
132,083
(111,792)
(7,227)
(11,771)
20,892
(17,683)
(1,143)
(1,862)
(573,596)
(90,728)
(95,895)
(43,816)
407,894
25,100,686
(13,485,342)
(15,168)
(6,930)
64,517
3,970,244
(2,133,012)
147,106
474,562
3,989
4,310
–
19
–
–
151,095
478,891
23,899
75,748
Note:
(1)
(2)
This relates mainly to the deferred tax expense relating to withholding tax on dividends from Yuchai.
This relates mainly to the deferred tax liabilities relating to cumulative withholding tax on dividends that are
expected to be declared from income earned after December 31, 2007 by Yuchai.
Geographic information
The geographic information for revenue from external customers is disclosed in Note 6.1.
Revenue from one customer group amounted to RMB 5,328.0 million (US$ 842.7 million)
RMB 6,018.2 million; 2019: RMB 5,205.5 million), arising from sales by Yuchai segment.
(2020:
ANNUAL REPORT 2021 113
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
30. SEGMENT INFORMATION (cont’d)
Non-current assets
People’s Republic of China
Other countries
31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
6,268,004
94,067
6,370,404
89,549
1,007,624
14,164
6,362,071
6,459,953
1,021,788
Non-current assets for this purpose consist of property, plant and equipment, right-of-use assets, investment in
joint ventures and associates, investment property, intangible assets and goodwill.
31. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial
liabilities comprise loans and borrowings, trade and other payables. The main
purpose of these financial liabilities is to finance the Group’s operations. The Group has trade and other receivables,
and cash and bank deposits that derive directly from its operations. The Group also holds quoted equity securities.
The Group is exposed to market risk, credit risk and liquidity risk. The Group’s senior management oversees the
management of these risks. There has been no change to the Group’s exposure to these financial risks or the
manner in which it manages and measures the risks.
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market prices. Market risk comprise three types of risk: interest rate risk, currency risk and other price
risk, such as equity price risk. Financial instruments affected by market risk include loans and borrowings, deposits,
quoted equity securities and derivative financial instrument.
The sensitivity analyses in the following sections relate to the position as of December 31, 2020 and 2021.
The sensitivity analyses have been prepared on the basis that the amount of net debt, the ratio of fixed to floating
interest rates of the debt and the proportion of financial
instruments in foreign currencies are all constant at
December 31, 2021.
The analyses exclude the impact of movements in market variables on provisions and on the non-financial assets
and liabilities of foreign operations.
114 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
31. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont’d)
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates
primarily to the Group’s interest-bearing bank deposits and loans and borrowings from banks and financial
institutions. The interest-bearing loans and borrowings of the Group are disclosed in Note 26. As certain interest
rates are based on interbank offer rates, the Group is exposed to cash flow interest rate risk. This risk is not
hedged. Interest-bearing bank deposits are short to medium-term in nature but given the significant cash and bank
balances held by the Group, any variation in the interest rates may have a material impact on the results of the
Group.
The Group manages its interest rate risk by having a mixture of fixed and variable rates for its deposits and
borrowings.
Interest rate sensitivity
The sensitivity analyses below have been determined based on the exposure to interest rates for bank deposits
and interest-bearing financial liabilities at the end of the reporting period and the stipulated change taking place at
the beginning of the year and held constant throughout the reporting period in the case of instruments that have
floating rates. A 50 basis points increase or decrease is used and represents management’s assessment of the
possible change in interest rates.
If interest rate had been 50 (2020: 50) basis points higher or lower and all other variables were held constant, the
profit before tax for the year ended December 31, 2021 of the Group would increase/decrease by RMB 15.4 million
(US$ 2.4 million) (2020: increase/decrease by RMB 20.9 million).
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of
changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates
primarily to the Group’s sales, purchases and financial liabilities that are denominated in currencies other than the
respective functional currencies of entities within the Group. The Group also holds cash and bank balances and
other investments denominated in foreign currencies. The currencies giving rise to this risk are primarily the
Singapore Dollar, Renminbi, US Dollar and Euro.
Foreign currency translation exposure is managed by incurring debt in the operating currency so that where
possible operating cash flows can be primarily used to repay obligations in the local currency. This also has the
effect of minimizing the exchange differences recorded against income, as the exchange differences on the net
investment are recorded directly against equity.
ANNUAL REPORT 2021 115
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
31. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont’d)
Foreign currency risk (cont’d)
The Group’s exposures to foreign currency are as follows:
31.12.2020
Quoted equity securities
Trade and other receivables
Cash and bank balances
Financial liabilities
Trade and other payables
Net assets/(liabilities)
Quoted equity securities
Trade and other receivables
Cash and bank balances
Financial liabilities
Trade and other payables
Net assets/(liabilities)
US$’000
Foreign currency risk sensitivity
Singapore
Dollar
Others
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Euro US Dollar Renminbi
6,258
620
181,575
(1,462)
(6,184)
–
8,624
3,829
–
(9,356)
–
913
45,203
–
(10,858)
–
305
–
–
(2,464)
–
372
15,086
–
–
180,807
3,097
35,258
(2,159)
15,458
31.12.2021
Singapore
Dollar
Others
RMB’000 RMB’000 RMB’000 RMB’000
Euro US Dollar
606
676
164,544
(1,428)
(4,551)
159,847
25,283
–
8,806
2,535
–
(8,997)
2,344
371
–
297
4,345
–
(3,651)
991
157
–
–
14,342
–
(510)
13,832
2,188
A 10% strengthening of the following major currencies against the functional currency of each of the Group’s
entities at the reporting date would increase/(decrease) profit before tax by the amounts shown below. This
analysis assumes that all other variables, in particular interest rates, remain constant.
Singapore Dollar
Euro
US Dollar
Renminbi
Profit before tax
31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
18,081
310
3,526
(216)
15,985
234
99
–
2,528
37
16
–
116 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
31. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont’d)
Equity price risk
The Group has investment in Thakral Corporation Ltd “TCL” which is quoted equity securities.
Equity price risk sensitivity
A 10% increase/(decrease) in the underlying prices at the reporting date would increase/(decrease) Group’s profit
before tax by the following amount:
Statement of profit or loss
Credit risk
31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
626
61
10
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer
contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily trade
receivables) and from its financing activities, including deposits with banks and financial
institutions, foreign
exchange transactions and other financial instruments.
Trade receivables
Customer credit risk is managed by each business unit subject to the Group’s established policy, procedures and
control relating to customer credit risk management. Credit limits are established for all customers based on
internal rating criteria.
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit
evaluations are performed for all customers requiring credit over a certain amount.
An impairment analysis is performed at each reporting date using a provision matrix. The provision rates are
determined based on days past due for groupings of various customer segments with similar loss patterns (i.e. by
profiles of the customers). The calculation reflects the reasonable and supportable information that is available at
the reporting date about past events, current conditions and forecasts of future economic conditions. Generally,
trade receivables are written-off at management’s discretion after assessment and are not subject to enforcement
activity. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial
assets disclosed in Note 15. The Group’s share of bills receivables of a joint venture which was used as collateral
as security is disclosed in Note 5.
ANNUAL REPORT 2021 117
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
31. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont’d)
Credit risk (cont’d)
Trade receivables (cont’d)
Set out below is the information about the credit risk exposure on the Group’s trade receivables using a provision
matrix:
Trade receivables
Days past due
As of December 31, 2020
Total Current
0 – 90
days
91-180
days
181-365
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
days >365 days
RMB’000
Expected credit loss rate
Estimated total gross carrying amount at
default
Expected credit loss
13.1%
–
4.2%
4.9%
7.8%
72.8%
332,567
43,519
126,706
–
91,233
3,860
29,675
1,451
36,413
2,852
48,540
35,356
Trade receivables
Days past due
As of December 31, 2021
Total Current
0 – 90
days
91-180
days
181-365
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
days >365 days
RMB’000
Expected credit loss rate
Estimated total gross carrying amount at
default
Expected credit loss
6.0%
–
0.6%
5.9%
13.2%
56.6%
557,767
33,210
279,402
–
154,494
916
37,756
2,234
43,084
5,707
43,031
24,355
At December 31, 2021, the Group had top 20 customers (2020: top 20 customers) that owed the Group more than
RMB 398.5 million (US$ 63.0 million) (2020: RMB 125.5 million) and accounted for approximately 63.4% (2020:
37.7%) of trade receivables (excluding bills receivables) respectively. These customers are located in the PRC.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets
mentioned in Note 15. The Group’s share of bills receivables of a joint venture which was used as collateral as
security is disclosed in Note 5.
Cash and fixed deposits are placed with banks and financial institutions which are regulated.
Liquidity risk
The Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by
management to finance the Group’s operations and to mitigate the effects of fluctuations in cash flows, and having
adequate amounts of committed credit facilities.
118 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
31. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont’d)
Liquidity risk (cont’d)
The table below summarizes the maturity profile of the Group’s financial assets and liabilities based on contractual
undiscounted payments.
As of December 31, 2020
Financial assets
Trade and bills receivables
Other receivables, excluding tax recoverable
Cash and bank balances
Quoted equity securities
Financial liabilities
Loans and borrowings
Trade and other payables (Note 22)
Lease liabilities
As of December 31, 2021
Financial assets
Trade and bills receivables
Other receivables, excluding tax recoverable
Cash and bank balances
Quoted equity securities
Financial liabilities
Loans and borrowings
Trade and other payables (Note 22)
Lease liabilities
1 year
or less
2 to 5
years
RMB’000 RMB’000
More than
5 years
RMB’000
Total
RMB’000
8,082,391
76,195
6,307,538
6,258
–
–
140,000
–
–
–
–
–
8,082,391
76,195
6,447,538
6,258
14,472,382
140,000
– 14,612,382
1,753,142
10,025,069
24,313
524,275
191,563
22,761
–
2,277,417
– 10,216,632
47,399
325
11,802,524
738,599
325 12,541,448
1 year
or less
2 to 5
years
RMB’000 RMB’000
Total
RMB’000
Total
US$’000
6,961,657
140,835
5,221,555
606
–
–
110,000
–
6,961,657
140,835
5,331,555
606
1,101,145
22,277
843,307
96
12,324,653
110,000 12,434,653
1,966,825
2,130,356
9,586,901
28,121
101,524
188,725
13,650
2,231,880
9,775,626
41,771
353,023
1,546,238
6,607
11,745,378
303,899 12,049,277
1,905,868
32. CAPITAL MANAGEMENT
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while
maximizing the return to shareholders through the optimization of the debt and equity balance except where
decisions are made to exit businesses or close companies.
ANNUAL REPORT 2021 119
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
32. CAPITAL MANAGEMENT (cont’d)
The capital structure of the Group consists of debts (which includes the borrowings, lease liabilities and trade and
other payables, less cash and bank balances) and equity attributable to equity holders of the company (comprising
issued capital and reserves).
Loans and borrowings (current and non-current) (Note 26)
Lease liabilities (current and non-current) (Note 25)
Trade and other payables (current and non-current) (Note 22)
Less: Cash and bank balances (Note 16)
Net debts
Equity attributable to equity holders of the company
Total capital and net debts
31.12.2020 31.12.2021 31.12.2021
US$’000
RMB’000
RMB’000
2,230,000
39,778
10,302,531
(6,447,538)
2,203,000
40,531
9,827,840
(5,331,555)
348,454
6,410
1,554,497
(843,307)
6,124,771
9,014,624
6,739,816
8,859,152
1,066,054
1,401,277
15,139,395 15,598,968
2,467,331
The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions.
To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return
capital to shareholders or issue new shares.
No changes were made in the objectives, policies or processes during the years ended December 31, 2020 and
2021.
As disclosed in Note 20, certain subsidiaries of the Group are required by the relevant authorities in the PRC to
contribute and maintain a non-distributable statutory reserve fund whose utilization is subject to approval by the
relevant authorities in the PRC. This externally imposed capital requirement has been complied with by the
subsidiaries of the Group for the financial years ended December 31, 2020 and 2021.
33. FAIR VALUE MEASUREMENT
Quantitative disclosures fair value measurement hierarchy for assets and liabilities as of
December 31, 2020:
Date of valuation
Fair value measurement using
Quoted prices
in active
markets
(Level 1)
RMB’000
Significant
observable
inputs
(Level 2)
RMB’000
Total
RMB’000
Assets measured at fair value
Quoted equity securities:
Quoted equity shares – TCL (Note 14)
Debt instruments (ii):
Bills receivable
December 31, 2020
6,258
6,258
–
December 31, 2020
7,793,343
–
7,793,343
120 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
33. FAIR VALUE MEASUREMENT (cont’d)
Quantitative disclosures fair value measurement hierarchy for assets and liabilities as of
December 31, 2021:
Fair value measurement using
Date of valuation
Total
Total
US$’000 RMB’000
Quoted prices
in active
markets
(Level 1)
RMB’000
Significant
observable
inputs
(Level 2)
RMB’000
Assets measured at fair value
Quoted equity securities:
Quoted equity shares – TCL (Note 14) December 31, 2021
Debt financial assets (ii):
Bills receivable
December 31, 2021
96
606
606
–
528,110 3,338,816
–
3,338,816
Note:
(i)
(ii)
Forward currency contracts are valued using a valuation technique with market observable inputs. The most
frequently applied valuation techniques include forward pricing, using present value calculations. The models
incorporate various inputs including the foreign exchange spot and forward rates.
The fair values of the Group’s debt financial assets at fair value through OCI were measured using the
discounted cash flows model. The model incorporates market observable input including the interest rate of
similar instruments.
There have been no transfers between Level 1 and Level 2 during 2021 and 2020.
34. FINANCIAL ASSETS AND FINANCIAL LIABILITIES
As of December 31, 2020
Financial assets
Quoted equity securities
Trade and bills receivable
Other receivables
Cash and bank balances
Financial liabilities
Trade and other payables
Lease liabilities
Loans and borrowings
Note
14
15
15
16
22
25
26
Financial
assets
at fair value
through
profit or loss
Financial
assets at
amortized
costs
Fair Value
through
OCI
RMB’000 RMB’000 RMB’000
Other
financial
liabilities
at amortized
cost
RMB’000
Total
RMB’000
6,258
–
–
–
–
289,048
76,195
6,447,538
–
7,793,343
–
–
–
–
–
–
6,258
8,082,391
76,195
6,447,538
6,258
6,812,781
7,793,343
– 14,612,382
–
–
–
–
–
–
–
–
–
–
–
–
10,216,632 10,216,632
39,778
2,230,000
39,778
2,230,000
12,486,410 12,486,410
ANNUAL REPORT 2021 121
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
34. FINANCIAL ASSETS AND FINANCIAL LIABILITIES (cont’d)
As of December 31,
2021
Financial assets
Quoted equity securities
Trade and bills receivable
Other receivables
Cash and bank balances
Financial liabilities
Trade and other payables
Lease liabilities
Loans and borrowings
Note
14
15
15
16
22
25
26
Financial
assets
at fair value
through
profit or loss
Financial
assets at
amortized
costs
Fair Value
through
OCI
RMB’000 RMB’000 RMB’000
Other
financial
liabilities
at amortized
cost
RMB’000
Total
Total
RMB’000 US$’000
606
–
–
– 3,622,841 3,338,816
–
–
140,835
–
– 5,331,555
–
–
–
–
606
96
6,961,657 1,101,145
22,277
843,307
140,835
5,331,555
606 9,095,231 3,338,816
– 12,434,653 1,966,825
–
–
–
–
–
–
–
–
–
–
–
–
9,775,626
40,531
2,203,000
9,775,626 1,546,239
6,410
348,454
40,531
2,203,000
12,019,157 12,019,157 1,901,103
Quoted equity securities relates to the Group’s investment in TCL, which is a company listed on the Main Board of
the Singapore Exchange and is involved in investment in real estate and marketing and distributing brands in
beauty, wellness and lifestyle categories. Fair values of the quoted equity shares are determined by reference to
published price quotations in an active market.
Financial assets/liabilities through profit or loss reflect the positive/negative change in fair value of the foreign
exchange forward contract that is not designated in hedge relationships, but are, nevertheless, intended to reduce
the level of foreign currency risk.
Changes in liabilities arising from financing activities
January 1,
2020 Cash flows Addition
RMB’000 RMB’000
RMB’000
Accretion of
interest
Foreign
exchange
movement
RMB’000 RMB’000
Translation
reserve Others
RMB’000 RMB’000
December 31,
2020
RMB’000
As of December 31,
2020
Loans and borrowings
- current
- non-current
Lease liabilities
- current
- non-current
Total liabilities from
2,055,046
–
(326,280)
500,000
–
–
–
–
1,228
–
6
–
–
–
1,730,000
500,000
28,633
31,374
(37,561)
–
4,039
11,217
2,198
–
–
–
409
25,037
(531) (25,037)
22,755
17,023
financing activities
2,115,053
136,159
15,256
2,198
1,228
(116)
–
2,269,778
122 CHINA YUCHAI INTERNATIONAL LIMITED
NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
34. FINANCIAL ASSETS AND FINANCIAL LIABILITIES (cont’d)
Changes in liabilities arising from financing activities (cont’d)
January 1,
2021 Cash flows Addition
RMB’000 RMB’000
RMB’000
Accretion of
interest
RMB’000
Translation
reserve
Others
RMB’000 RMB’000
December 31,
2021
RMB’000
December 31,
2021
US$’000
As of
December 31,
2021
Loans and
borrowings
- current
- non-current
Lease liabilities
- current
- non-current
Total liabilities from
financing
activities
1,730,000
500,000
(127,000)
100,000
–
–
–
–
– 500,000
– (500,000)
2,103,000
100,000
332,637
15,817
22,755
17,023
(24,940)
–
1,270
22,701
1,819
–
(54) 26,275
(26,275)
(43)
27,125
13,406
4,290
2,120
2,269,778
(51,940) 23,971
1,819
(97)
–
2,243,531
354,864
The ‘Others’ column includes the effect of reclassification of non-current portion of loans and borrowings, including
obligations under finance leases and lease liabilities due to the passage of time.
35. SUBSEQUENT EVENT
Incorporation of Beijing Yuchai Xingshunda New Energy Technology Co., Ltd.
On March 15, 2022, the Group announced that a 65-35 partnership company, Beijing Yuchai Xingshunda New
Energy Technology Co., Ltd. was incorporated with registered capital of RMB 10.0 million (US$ 1.6 million). This
was further to the Company’s announcement made on October 20, 2021 that the Group had entered into a
cooperation agreement with Beijing Xing Shun Da Bus Co., Ltd., to combine the resources of both partners to
accelerate the development, manufacturing and sale of fuel cell powertrain systems as well as core fuel cell power
system components for the Beijing, Tianjin and Hebei markets.
REFERENCE INFORMATION
US TRANSFER AGENT AND REGISTRAR
Computershare
PO BOX 505000
Louisville, KY 40233-5000
1-800 522 6645 in US
201-680-6578 outside US
SHAREHOLDER WEBSITE
www.computershare.com/investor
INVESTOR RELATIONS
BlueFocus Communication Group of America
c/o Awaken Advisors
110 East 59th Street
Suite 3200
New York, NY 10022
COMMON STOCK
China Yuchai International Limited
Stock is listed on the New York Stock Exchange
(NYSE: CYD)
AUDITORS
Ernst & Young LLP
One Raffles Quay
North Tower, Level 18,
Singapore 048583
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Operating Office
China Yuchai International Limited
16 Raffles Quay, #39-01A Hong Leong Building
Singapore 048581
Manufacturing Location
Guangxi Yuchai Machinery Company Limited
88 Tianqiao West Road, Yulin, Guangxi 537005
People’s Republic of China